DivcoWest’s Fifth Fund Exceeds $1.5B Target

The value-add investment vehicle, which targets office and R&D properties in markets with high barriers to entry, closed on a high note, becoming the company’s largest fund ever.

101 S. Ellsworth Ave., San Mateo, Calif.
101 S. Ellsworth Ave., San Mateo, Calif.

DivcoWest Real Estate Services held its final close on DivcoWest Fund V, raising $1.6 billion in commitments for investment in value-add office and R&D assets. The investment vehicle, having surpassed its target of $1.5 billion, takes on the title of DivcoWest’s largest fund ever.

DivcoWest is no stranger to exceeding a fundraising goal, but the real estate investment and asset manager never counts its chickens.

“We try to be realistic with our targets, but never assume that they will be reached until completed and are always grateful our partners have chosen to trust us with their equity,” Heather Moylan, senior director and head of investor relations with DivcoWest Real Estate Services, told Commercial Property Executive. “Our objective is to continue earning and maintaining that trust through diligence, communication, transparency and performance.”

The best advertisement for Fund V turned out to be DivcoWest’s previous funds, as 80 percent of commitments to Fund V came from existing investors. Among the repeat offenders was Oregon Public Employees’ Retirement Fund; the pension committed $100 million to DivcoWest Fund IV, which closed in 2014 and has returned more than 130 percent of invested capital, and $250 million to Fund V. 

“We believe that our performance, continued disciplined approach to investing and clear strategic vision, as well as a shared importance of relationships have helped influence the continued trust and participation from long-standing investors and the attraction of new investors,” Moylan added.

All told, the list of contributors to Fund V consisted of more than 40 institutional investors, representing domestic and foreign public and private pension funds, financial institutions, endowments and high net worth individuals.

More shopping to do

Fund V landed its first commitments in April 2016, and DivcoWest hasn’t been too shy about investing. “We are pleased to have 25 percent of Fund V already designated to what we believe is an attractive group of investments,” Stuart Shiff, DivcoWest’s founder & CEO, said in a prepared statement. “We look forward to continuing the creation and management of a dynamic and disciplined portfolio of real estate and real estate related investments for our investors.”

Fund V, like its predecessors, targets assets in high-barriers-to-entry markets featuring strong education, employment, amenities and transportation systems. High on the list are the San Francisco Bay Area, Boston, Southern California, Washington, D.C., New York City, Seattle, and Austin, TX. Fund V’s list of purchases to date includes 101 S. Ellsworth Ave., an 88,000-square-foot office building in downtown San Mateo that was picked up for $73.5 million in what was the largest office transaction in Northern California’s Peninsula region in the second quarter of 2017.

Any investors who missed out on Fund V will have another opportunity—at some point; no date has yet been set for the launch of DivcoWest Fund VI.

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