EXCLUSIVE: Spear Street closes biggest fund at $1.1bn

Spear Street Capital, a San Francisco-based real estate investment company, held a first and final close for its fifth fund, SSC V, earlier this month. The firm closed the fund at its nearly $1.1 billion target, according to a filing with the US Securities and Exchange Commission.

Chief executive officer John Grassi said his firm raised all the capital for SSC V in a single close. He said that the fund will have a similar investment strategy to that of its predecessor vehicles. The firm’s investment strategy targets US and Canadian offices that cost more than $25 million, according to the company’s website. Recent investments have included the purchase of three office buildings in Minneapolis in May and the acquisition of the majority of former technology giant Blackberry’s offices in Ontario, Canada last year.

“The market’s definitely in an upcycle,” Grassi said in an interview. “I would say part of our strategy is being pretty aggressive when the market has a correction or change.”

SSC V represents the largest real estate fund to date for Spear Street. It previously raised $800 million for SSC IV in 2012, according to PERE Research & Analytics. The company launched its first fund in 2002.

Grassi declined to name specific investors in the firm’s fifth fund, but said that the vehicle drew a mix of investors similar to those in prior funds, including endowments, private investors and retirement funds. According to PERE Research & Analytics, previous limited partners in Spear Street’s funds include The University of Michigan Board of Regents.

Spear Street’s latest fund comes at a time when office fundraising is on an uptick that started in 2014. Fundraising hit a five-year low in 2013, with $3.6 billion office-focused fundraising, according to PERE Research and Analytics. In the first half of 2015, four office-focused funds raised $2.1 billion – still distant from 2011’s banner year of $6.9 billion in fundraising.