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GI Partners buys first asset for CalPERS account

The Menlo Park, California-based private equity firm has closed on its debut deal for TechCore, a $500 million core real estate separate account launched earlier this year with the largest US public pension plan.

GI Partners has acquired its first property for TechCore, a $500 million core real estate separate account that the firm formed with the California Public Employees’ Retirement System (CalPERS) earlier this year. The account, which was announced in May, will focus on purchasing technology-focused real estate assets, such as data centres, Internet gateways, corporate campuses for technology firms and life sciences properties.

TechCore acquired 1600 Technology Drive, a 198,033-square-foot office building located in San Jose and known as Skyport Plaza, for its proximity to the San Jose International Airport. The eight-story property is the headquarters of Amtel Corporation, a designer and manufacturer of microcontrollers and other related products, which has leased the building through 2022. GI Partners did not disclose the purchase price, but data provider Real Capital Analytics said the building was purchased for $76.5 million from The Blackstone Group, which bought the property through its Equity Office affiliate in 2010.

“TechCore is well positioned to invest in desirable ‘core’ technology properties, and the acquisition of 1600 Technology Drive is representative of our strategy,” said Rick Magnuson, executive managing director of GI Partners, in a statement.  “This premier property is situated in one of the country’s leading technology centres and features numerous distinctive technology attributes, including a raised floor environment.  We continue to actively evaluate numerous attractive investment opportunities around the country on behalf of our technology-advantaged real estate programme.”

The separate account will help CalPERS to achieve its 75 percent core allocation target for real estate, which was set under a five-year strategic plan that the pension plan adopted for the asset class in February 2011. “The TechCore investments will have core qualities of high occupancy, strong cash yield, quality tenancy, strong demand and long-term leases,” said a CalPERS spokeswoman after the TechCore account was announced in May.

CalPERS is not the only US institutional investor pursuing a technology-focused core real estate strategy. During the second quarter, the California State Teachers’ Retirement System committed $250 million to a core investment vehicle called DataCore, which will invest in technology-focused real estate in the US. That vehicle also is managed by GI Partners.