The Davis Cos. has raised $877.1 million into Davis Investment Ventures Fund V—the largest fund in company history—organized it says to capitalize on widespread real estate asset repricing and market dislocation across asset classes.
This expands its capital base by more than $977.1 million after including a co-investment sidecar vehicle totaling $100 million.
The company intends to capitalize on market dislocations across multiple asset classes, with an emphasis on its three core investment verticals of multifamily, science and technology, and industrial and self-storage.
The early Fund V investments include assets in Massachusetts, Rhode Island, Florida, New York and Virginia.
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Davis entered the fund management business at the height of the Global Financial Crisis in 2009 and has since raised approximately $3 billion combined across its value-add fund series platform.
Investors in Fund V include major pension funds, university and other institutional endowments, foundations, single family offices, high and ultra-high net worth investors and an offshore sovereign wealth fund.
Park Madison Partners served as Davis’ exclusive U.S. institutional placement agent.
Quentin Reynolds, chief investment officer at Davis, said in prepared remarks that there is significant distress in the current market, and [Davis] intends to be nimble and opportunistic where a mismatch between pricing and risk exists.
Jeff Holzmann, COO at RREAF Holdings, told Commercial Property Executive, “As the interest rates remain high compared to years past, some property owners will start to feel the weight of the increased carrying costs, higher lender payments and lower yields.”
“This trend will eventually lead, as it already has started to, some sponsor to sell, offload and even lose assets to forecloses. Those assets then need to be refinanced and sold to another, hopefully experienced operator that can put the asset back on track,” Holzmann added.
He said this concept is what sponsors mean when they talk about “distressed” assets.
“There is a large and logical appetite in the market to capitalize on those opportunities, but in order to do so effectively, buyers need to have capital on hand and ready to bid and act fast in a competitive environment,” Holzmann said. “This is the main reason we are seeing additional capital flow into these fund structures that are focused on opportunistic and distressed assets.”
Just last month, The Davis Cos. and Invesco Real Estate delivered 101 Smith Place, a 161,616-square-foot Class A life science and laboratory building in Cambridge, Mass. The build-to-suit project represents the second phase of The Quad, a 554,019-square-foot campus.