Barings Closes $680M Value-Add Office Fund
Barings has closed on its first major high-yield U.S. fund since 2016, and it has done better than anticipated.
The fund, which will target “specialized office space,” raised $680M, well over the $500M target Barings set for the vehicle when it launched in 2021, Green Street reported.
Barings expressed confidence in its chosen subsectors of real estate, in spite of overall difficulty in the office market. Other major investors have made sharp turns away from the office sector. Blackstone, which closed a $30B real estate fund this week, its largest ever, has 80% of its assets in nonoffice properties, including data centers and industrial real estate.
But Barings emphasized that it is targeting a specific type of property bucking the trends: office space leased to life sciences and tech tenants.
"At Barings, we believe there is strong relative value for the highest quality office assets that attract high-caliber life science and technology tenants, who continue to drive advancements in healthcare and global economic growth," Barings Head of U.S. Real Estate Equity Acquisitions and Portfolio Management Joe Gorin said in a statement. "The leasing performance of this specialized subset of office has substantially outperformed the overall office market since the beginning of the pandemic."
The Barings fund and Lane Partners in 2021 purchased one such property, Peninsula Innovation Point in Silicon Valley, for $170M and are repositioning it, Green Street reported. Meta has leased 520K SF of the 536K SF property, the San Francisco Business Times reported last year. Barings has also recapitalized properties in Boston and Raleigh, North Carolina.
The fund has already deployed almost $300M and will have $1.75B of buying power with leverage, according to Green Street.
Gorin is overseeing the fund, along with Managing Director and Portfolio Manager John Kolb.
CORRECTION, APRIL 12, 1:30 P.M. PT: A previous version of this story mischaracterized Barings' assessment of the office market as a whole. The story has been updated.