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Beacon eyes $6bn

The Boston firm continues to target knowledge-based cities at it raises its sixth value-add fund.

Beacon Capital Partners is targeting $6 billion (€3.9 billion) for its latest real estate vehicle, Beacon Capital Strategic Partners VI.

BCSP VI – which held its first close in April – will continue the Boston-based firm's focus on office properties in key urban, knowledge-based cities, people familiar with the matter told PERE.

Beacon, founded in 1998 by Alan Leventhal, has attracted strong interest from investors for the latest outing, with industry sources saying limited partners were keen to see concrete track records during the current economic climate.

“LPs are really interested in investing with managers who are on their fifth or sixth fund, not just their first or second. It's about having a strategy where the focus is very much about adding value to properties in a hands-on way as opposed to financial engineering or relying on macro economic trends,” the source added.

Beacon closed its fifth value-added fund, BCSP V, on $4 billion last year beating its initial target of $3 billion in equity commitments. With leverage, the fund had a buying power of around $10 billion and was considered the largest global office-focused fund ever to be raised.

BCSP VI is expected to hold a final close at the end of the year, people familiar with the matter said. If it hits its target it would again mark Beacon as one of the largest office-focused fund managers in the world.

The fund will continue Beacon's strategy of investing in urban markets facing supply constraints such as Boston, Washington DC, New York, Los Angeles, San Francisco, Seattle, Chicago, London and Paris. Beacon is also believed to be expanding its geographic target to include office properties in Tokyo. Beacon declined to comment.

Led by Alan Leventhal, Beacon – formed in 1998 following the merger of its predecessor public company, Beacon Properties Corporation, and Equity Office Properties Trust – has raised $10.3 billion in closedend funds since its inception. It was named the ninth largest private equity real estate firm in the world, according to the PERE 30 published last month, having raised $8.08 billion in dedicated real estate funds over the past five years.

During the past 18 months, Beacon has become one of the heaviest investors in London, not least with its £650 million acquisition of the City Point tower from a consortium led by Tishman Speyer and Mid City Place. The office block – at the time one of the most expensive buildings ever sold in the UK and one of the largest office buildings in the City of London – was purchased through Fund V, as part of the vehicle's eight investments. In total the fund has invested in 44 buildings and 16.4 million square feet, according to Beacon's website.

CBRE closes $2.1bn fund
CB Richard Ellis has closed CBRE Strategic Partners US 5 with total equity commitments of $2.1 billion (€1.4 billion). The vehicle, which comprises two limited partnerships – Strategic Partners US Value 5 and Strategic Partners US Opportunity 5 – will have a purchasing power of $6.4 billion. Strategic Partners US Value 5 will target value-added US investments, including the repositioning of assets and stabilizing vacancy rates, as well as investing in “controlled risk” development. Strategic Partners US Opportunity 5 will focus on repositioning US distressed assets with high levels of vacancy. It will also invest in “early stage” development, acquire and reposition portfolios and invest in operating companies.

Westport seeks $500m
Westport Capital Partners is targeting $500 million (€324.5 million) for its second real estate vehicle, WCP II. The fund, which has already held a first close on around $200 million, will target distressed opportunities in the US as well as continue the firm's strategy of investing in India and Vietnam, according to people familiar with the matter. The Westport, Connecticut firm last year announced plans to develop a 60-acre residential complex in Hyderabad, India, in a deal worth more than $100 million. WCP II is expected to invest in distressed debt as well as real assets.

Morgan Stanley targets dislocation
Morgan Stanley Real Estate is on the road with a distressed real estate opportunities fund targeting $10 billion (€6.33 billion). The fund, called Morgan Stanley Real Estate Fund VII Global, is targeting global distressed investments, as well as development opportunities in the emerging markets, with typical investments between $20 million and $1 billion. According to Pennsylvania Public School Employees' Retirement System, MSREF VII will invest in the distressed real estate debt and equity of large corporations and government entities, as well as investing in China, India, and other emerging markets where “the demand for quality real estate assets far outstrips supply.” The fund follows on from MSREF VI International, which closed on $8 billion last year.

Goldman Sachs' urban fund considers fundraising
The urban investment fund set up by Goldman Sachs and construction firm L&M Development to invest in housing projects in underserved communities is not ruling out venturing into real estate fund management in the future. GSLM Capital Partners was launched last month with plans to initially invest up to $100 million (€65 million) of Goldman Sachs' own capital in housing communities in New York, San Francisco and Los Angeles. However speaking to PERE, GSLM president Larry Florin said the fund would not rule out such an option in the future. “We are certainly not going to preclude, if this goes well, which we think it will, from doing this as a third party investment group,” he said. GSLM builds on the activities of the bank's urban investment group, which provides long-term capital investment for firms run by ethnic minorities and real estate developers targeting urban communities.