The final close of CBRE Strategic Partners U.S. Value 7 fund was announced on July 2, making it the 10th fund in CBRE’s U.S. series and the firm’s seventh value-added fund. In the past 15 years, CBRE Strategic Partners U.S., a division of CBRE Global Investors, has raised $7.2 billion in 10 funds. NREI asked Vance Maddocks, president of CBRE Strategic Partners U.S., based in Los Angeles, to explain how the new fund works.
- What kind of fund is it? The fund is a closed-end, value-added commercial real estate fund invests in U.S. properties.
- What types of properties is the fund looking for? The fund is looking for institutional-quality multifamily, office and hotel properties priced at $50 million to $500 million in 10 selective markets: Boston; Dallas; Houston; Miami; Orange County, Calif.; Philadelphia; Portland, Ore.; San Francisco; Seattle and Washington, D.C.
- What kind of investment strategy is being utilized? “We describe this style of investing as low-risk, value-added. It combines a very nice income return for our investors, typically in the 8 percent range, with solid appreciation that comes from our ability to operate the real estate and add value through repositioning and leasing,” says Maddocks.
- Who are the investors? There are 26 investors from the U.S., primarily defined benefit pension plans, both corporate and public, that contribute about two-thirds of the capital. The remaining one-third of the capital came from outside the U.S. and includes investors from Europe, the Middle East and Asia.
- How big is the fund? The fund is planned to reach $3.5 billion in total capitalization—plus or minus 30 properties—when it’s fully invested. The fund closed on June 30 with $1.34 billion in equity raised, and is currently at $2.5 billion total capitalization—or 75 percent invested—and has leased 760,000 sq. ft. of office space.
- What’s the most important takeaway on the fund? “We’re very active as an investor in the market today, and from a tenant’s perspective, we invest in very high-quality real estate. Our mission is to create great environments for the tenants who reside or conduct their businesses in our spaces,” says Maddocks.