Beacon raises $1.58bn for latest fund – Exclusive

The vehicle is the private equity real estate firm’s largest since the global financial crisis.

Beacon Capital Partners has completed its eighth real estate fundraise, closing on $1.58 billion for Beacon Capital Strategic Partners 8, along with an additional $220 million in co-investment equity, PERE has learned.

The Boston-based private equity real estate firm launched BCSP 8 in May 2017 with a $1.25 billion target. After holding a first close on $990 million in November 2017, Beacon subsequently raised the target to $1.5 billion. The fund had a hard-cap of $1.75 billion.

Beacon was understood to have held a final close for the fund, whose investor base included US and foreign pensions, sovereign wealth funds, financial institutions, endowments and foundations, last month. Among the US pensions that committed to the fund were the California State Teachers’ Retirement System, which earmarked $300 million, and the State of Wisconsin Investment Board, which allocated $100 million, according to PERE data.

Approximately 60 percent of BCSP 8 were repeat investors, many of which have invested with the firm for more than a decade. More than 50 percent of the investors were from the US, while a quarter came from Canada, 13 percent from Asia, 6 percent from Europe and the remainder from the Middle East.

BCSP 8 is the largest fund Beacon has raised since the global financial crisis, and the second for which the firm gathered co-investment equity. The firm’s first post-GFC fund, BCSP 7, collected $1.08 billion in November 2015, plus $300 million of co-investment capital.

Before the GFC, Beacon had attracted $2.54 billion for BSCP VI in 2008, $4.04 billion for BSCP V in 2007 and $2.03 billion for BSCP IV in 2005.

BCSP 8 will follow the same value-add strategy as its predecessors, targeting underperforming properties in the major US markets of Boston, New York, Washington DC, Chicago, Denver, Los Angeles, San Francisco, Seattle, and Portland, Oregon, to acquire and make capital improvements to drive leasing. The fund will use 60 percent leverage.

To date, Beacon has invested 17 percent of BCSP 8’s capital in the purchase of four assets, including 2445 M Street in Washington, DC; 303 East Wacker in Chicago; 160 West Santa Clara in San Jose, California; and 800 North Brand Boulevard in Glendale, California.

BSCP VI, which is expected to be fully harvested this year, is on track to generate a net internal rate of return of 18 percent, exceeding its 13 percent net return target.