Savanna fund secures $30m commitment

Ohio Fire and Police commits to the $500m Savanna Real Estate Fund II as it targets office properties in NYC, DC and Boston areas. The firm recently closed on two distressed note sales in NYC, including 104 W. 40th St.

Savanna Real Estate has secured a $30 million commitment to its second office fund from the Ohio Police and Fire Pension Fund.

The New York-based is targeting $500 million for Savanna Real Estate Fund II, focused on office properties in New York, Washington DC and Boston areas, a spokesman for the $11.3 billion pension told PERE.

The pension approved the commitment at its investment committee meeting Wednesday.

In August, New York Commons Retirement Fund committed $30 million to the vehicle through Franklin Templeton Real Estate Adviser’s fund of fund, the Lake Montauk Real Estate Fund. New York had never invested with Savanna before, the public pension said at the time.

Savanna has raised at least $140 million for Fund II, according to SEC filings. In October, the firm also closed the acquisition of a $58.2 million senior note on the 318,000-square-foot office property at 5 Hanover Square, New York.

Data provider Real Capital Analytics said the property was bought all-cash from lender Capital One, who had financed a $60 million first mortgage on the office in 2003. The borrowers at the time were Swig Burris Equities and Zamir Equities, affilates of New York owner and developer Kent Swig.

104 West
40th St, NYC

In August, the firm also took over New York’s Spring Mills Building on West 40th Street for $56.5 million, after Principal Real Estate Investors and Mermel & McLain saw occupancy levels drop to 41 percent at the peak of the credit crisis, RCA said.

Savanna paid first mortgage lender ING $46 million for the note, and a further $10 million to Principal to give up the property.

Managing partner Nicholas Bienstock last year defended the role of placement agents to the California State Teachers Retirement System amid the pay-to-play scandal warning the firm would have been unable to raise its first institutional vehicle – which closed on $313 million in 2008 – and thereby move away from its deal-by-deal fundraising model without Park Hill Real Estate.

“Only at the end of that process, which took almost two years of hard work, was our placement agent paid. Their fee was paid by (us) the client, not the investors,” Bienstock said in a memo to the public pension plan. “Had we been unsuccessful in raising our fund, our placement agent would have received practically nothing after years of extraordinary expenditure of time, effort, energy, expertise and commitment. Could we, as a small investment firm have managed this process and transitioned to an institutional fund structure without a capable placement agent? Absolutely not.”