6 Things You Need to Know about CBRE’s Newest Fund

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.

1. What kind of fund is it? The fund is a closed-end, value-added commercial real estate fund invests in U.S. properties.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.