The fund will be managed by a partnership of the three firms: New Faze Development, a smart-growth development firm based in Sacramento that will contribute land to the deal; MacFarlane Partners, a San Francisco-based real estate investment manager with $9 billion of assets under management; and Seattle-based Weyerhaeuser Realty Investors, which has been investing in single-family housing developments since the 1970s.
"We see this investment as important recognition of the rapidly escalating values of infill development across California," says CalPERS portfolio manager Jose McNeill.
CalPERS is investing $56 million in the fund, with the three co-managers contributing a total of $17 million. Operating as New Faze Investment Fund I, the new partnership is expected to develop just over 2,000 housing units and residential lots worth an estimated $600 million. A source with MacFarlane tells GlobeSt.com that about 15% of the units will be attached.
New Faze, which has a real estate portfolio valued at around $1 billion, will contribute 21 existing land investments to the new partnership, all of which are in the predevelopment stage. The assets are located in Sacramento and its immediate suburbs; Placerville, a city in the Sierra foothills; the Northern California cities of Chico, Oroville and Yuba City; and Merced in California's Central Valley. The partnership also will be acquiring additional properties in these and other markets.
CalPERS is the nation's largest public pension fund with assets of $207 billion. It has allocated $5.8 billion for single-family housing development and $3.7 billion for urban real estate investments in California. MacFarlane Partners and Weyerhaeuser Realty Investors have jointly invested in single-family residential development projects on behalf of CalPERS since 1995, helping to develop nearly 40,000 single-family homes/residential lots with aggregate revenue of more than $9 billion.
"These investments not only deliver high returns, they also help revitalize our cities… .," says MacFarlane Partners founder and managing principal Victor MacFarlane. "New Faze Investment Fund I is particularly exciting because we all are committed to the principles of smart growth--taking advantage of underutilized sites and existing infrastructure to create places where people can live, work and play, all in the same neighborhood."
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