Los Angeles-based Regent Properties has held a first close on Regent Office Fund (ROF) II, raising $60 million in equity. The closing includes commitments from strategic anchor investors BlackRock and Bruce Kovner’s Caxton Alternative Management. The investor base for ROF II also includes high-net-worth individuals and family offices.
Regent president Eric Fleiss told PERE that the fund’s contrarian strategy—in which Regent directly owns and operates the undervalued office properties and therefore avoids double fees—intrigued the big-name firms to make commitments. Additionally, the seven-year fund with its four-year investment period is shorter than a typical 10-year commingled fund, which has been an attractive aspect for investors, he explained.
Fleiss hopes the interest of ROF II’s anchor investors will build confidence in other potential limited partners. “To have Blackrock as an investor for our first traditional commingled fund, along with our good track record over a 25-year period, that provides evidence of our institutional credibility,” said Fleiss. Regent intends to hold a final close within the next year.
ROF II, which launched in June, is targeting $200 million to capitalize on opportunities to acquire and develop undervalued office buildings and related assets in markets throughout the western US, including Texas. ROF II ultimately expects to acquire $400 million to $500 million in office assets, with individual acquisitions ranging in size from $10 million to $50 million.
Over the last three years, Regent has purchased more than one million square feet of opportunistic office projects with an aggregate investment of more than $120 million. ROF II’s first transaction is set to close next week. Fleiss described the asset as a value-added office building in northern San Diego.
Founded in 1989 by managing partners Jeff Dinkin, Doug Brown and Allen Kohl of Kohl’s department stores, Regent Properties has acquired, developed and financed more than $2 billion in real estate transactions nationally.