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TPG JV to buy up to $1bn in US offices

The private equity firm is partnering with Gramercy Property Trust to create an office platform.

Alternative asset investment firm TPG’s real estate platform is teaming up with a new partner to buy up to $1 billion in US office properties over three years, according to an announcement Monday.

Fort Worth, Texas-based TPG Real Estate inked its first partnership with Gramercy Property Trust, a New York-based real estate investment trust, to form Strategic Office Partners. TPG and Gramercy committed a total of $400 million to the platform, which will be focused on investing single-tenant office assets in high-growth US markets.

Strategic Office Partners will be seeded with a six-property portfolio comprising one million square feet of office space in Los Angeles, the San Francisco Bay Area, San Diego, Nashville and Minneapolis. PERE understands that Gramercy will manage the portfolio. The offices’ amenities include cafeterias, gyms and flexible parking, according to the announcement.

“We see a compelling investment opportunity in the office net lease sector and believe that this portfolio of high-quality assets in strong growth markets is poised to benefit from positive fundamental trends,” said Avi Banyasz, TPG’s co-head of real estate, in Monday’s statement.

TPG bought a 75 percent interest from Gramercy in the six initial office assets, a stake valued at $187.5 million, according to a separate statement Monday. A spokesman for TPG declined to comment on the deal.

“Gramercy will look to leverage its extensive asset management experience from managing its own portfolio and the portfolios of third party clients to enhance the value of the platform over time,” said Ben Harris, Gramercy’s president.

Strategic Office Partners represents TPG’s second US real estate joint venture this year. In March, TPG formed a joint venture with Phillips Edison Grocery Center REIT II, a Cincinnati, Ohio-based REIT, to invest $250 million in equity in US shopping centers.

TPG Real Estate has about $7 billion in assets under management, according to the announcement.