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DivcoWest Lines Up CalSTRS Pension Fund to Back $300 Million Core Investment Venture

Joint Venture Will Target Real Estate Investments in Major U.S. Tech Markets
May 16, 2018
Lakewood Center I, a current DivcoWest holding in Austin

DivcoWest Real Estate Services, the San Francisco-based real estate investment firm headed by Stuart Shiff, has once again teamed up with the California State Teachers’ Retirement System (CalSTRS) to invest in commercial real estate. Their latest collaboration has earmarked $300 million to acquire properties in a handful of U.S. tech markets.

DivcoWest and CalSTRS have a 15-year history of investing together, with the retirement system putting more than $1.5 billion into various DivcoWest-sponsored investment vehicles over that time.

In their latest endeavor, the pair will look to acquire core and core plus commercial real estate in Austin, Boston, Los Angeles, New York City, San Diego, San Francisco and Seattle.

According to DivcoWest, the target markets are characterized as having strong local economies and highly qualified workforces, with a high concentration of what it calls "new economy industries," according to a description provided by the company.

In general, core and core plus funds target lower return thresholds than opportunistic and value add funds, with core plus having a higher risk profile but also a higher potential return.

About 62% of CalSTRS real estate allocations are targeted to core strategies. As of year-end 2017, it had $16.8 billion targeted to core assets, $5.34 billion to opportunistic investments and $4.5 billion to value-add strategies.

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