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D.R. Stephens, Inland American Form JV

SAN FRANCISCO-The partnership will use $100 million of equity to acquire $300 million of value-add industrial and R&D properties throughout the Bay Area.

By Brian K. Miller | Updated on May 04, 2007

SAN FRANCISCO-Locally based real estate investor D.R. Stephens has formed a partnership with Oak Brook, IL-based Inland American Real Estate Trust that will be acquiring value-add industrial and R&D properties throughout the Bay Area over the next several years. DR Stephens Institutional Fund LLC will be capitalized at $100 million–$90 million from Inland American and $10 million from D.R. Stephens, which will manage the partnership. With debt, it will be able to spend $300 million acquiring and repositioning properties.

Don Stephens, who runs D.R. Stephens with his son Lane, has been focusing solely on the type of product the fund plans to acquire for the past eight years. Don Stephens tells GlobeSt.com the fund will invest the equity over a two- to three-year period and will hold the assets for between five and seven years. After management fees, he expects the IRR after management fees will range from the mid- to high teens.

The Stephens’ like this particular arrangement in part because the funds are in a blind pool, which means they will be able to act more quickly. “We have done a lot of investing with wealthy individuals; the problem with that is we’d find a property and then spend three months raising money while other good deals came and went,” Don Stephens says. The company also has invested with institutional partners such as Buchanan Street Partners and Merrill Lynch, but never in a blind pool format.

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