OFFICIAL PRESS RELEASE:
Largest fund in company history organized to capitalize on widespread real estate asset repricing and market dislocation across asset classes
BOSTON, July 15, 2024 – The Davis Companies (Davis) today announced that it has expanded its capital base by more than $977.1 million amid the industry’s most challenging fundraising cycle in more than a decade. Davis has raised $877.1 million into Davis Investment Ventures Fund V, in addition to a co-investment sidecar vehicle totaling $100 million, 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. In addition to Massachusetts and Rhode Island, early Fund V investments include assets in Florida, New York, and Virginia.
“At an historically difficult time to raise private real estate capital, the success marked by the final closing of Fund V, our largest to date, represents strong investor endorsement of our vertically integrated developer/operator platform,” said Stephen Davis, President of Davis. “We have a nearly 50-year track record of unlocking superior investment opportunities which are not widely recognized by the market, particularly at times of disruption and uncertainty. We owe our success to the extraordinarily talented team of investment, development and management professionals who comprise our organization, wielding both a sophisticated understanding of our assets and the relentlessness that it takes to unlock their value.”
Since entering the fund management business at the height of the Global Financial Crisis in 2009, Davis has invested heavily in building a deep and experienced bench of talent, cultivated its expertise in innovation markets such as greater Boston, exhibited broad investment acumen throughout the United States and across asset classes and strategies, and proven with sustained consistency that it can successfully invest across cycles. Davis has now raised approximately $3 billion combined across its value-add fund series platform.
“There is significant distress in the current market, and we intend to be nimble and opportunistic where we see a mismatch between pricing and risk,” said Quentin Reynolds, Chief Investment Officer at Davis. “We will be exploring investments across our target asset classes, with a focus on markets driven by intellectual capital, innovation, and population flows, and we will act decisively when we identify opportunity to deliver maximum value for our investors.”
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.
DAVIS BEATS TARGET WITH FITH FUND
July 16, 2024 | Real Estate Alert
Davis Cos. this month held a final close on its fifth and largest value-added fund with $977 million of equity, exceeding its target.
Davis Investment Ventures Fund 5 launched in March 2022 with a goal of $950 million. Its haul, which includes a sidecar vehicle, has about $2 billion of buying power with leverage. It is angling to take advantage of current market dislocation and distressed situations, with a focus on multifamily, science and technology-related properties, and industrial and self-storage buildings. While the fund can make acquisitions nationwide, its primary target markets remain Boston and Cambridge. It also will consider deals in markets such as Atlanta, New York and Raleigh-Durham.
The vehicle’s launch coincided with the start of spiking borrowing costs that sank property values and curtailed investment activity, making for one of the most challenging fundraising periods on record.
“There was something of a perfect storm for raising funds of this vintage,” said Stephen Davis, president of the Boston-based investment and management firm. Pensions systems were reevaluating their holdings, and limited partners were facing liquidity issues in addition to general anxiety surrounding the sector. “It took a lot of work and creativity and some good fortune to find success amid these very challenging conditions that shaped the fundraising environment,” he said.
Davis Cos., launched in 1976 by Jonathan Davis, Stephen’s father, was able to lean on its track record and flexibility to invest across asset classes and geographies, as well as its ability to take on varied types of investments from development to structured equity.
“We enjoy a broad capital mandate,” Stephen Davis said. “When you don’t have the type of flexibility that we do, it’s hard not to be exposed to secular shifts.”
At the same time, the company invested heavily in expanding its operating platform with the goal of creating value at the property level. That enabled Davis Cos. to raise capital from existing investors, while new investors contributed more than 35% of the equity. Case in point: Texas Teachers, a first-time investor with the firm, allocated $100 million to the fund and another $100 million to an accompanying sidecar vehicle, according to public records.
Investors included pension funds, university and other institutional endowments, foundations, family offices, wealthy investors and a foreign sovereign wealth fund. Park Madison Partners was the placement agent, while the firm raised some capital directly from noninstitutional investors.
The fund’s initial investments include preferred-equity positions in two New York multifamily projects and a student-housing project in Florida. At the time, developers with projects in the pipeline were in need of so-called gap financing amid a tight lending environment, creating a brief window where investors could receive outsize returns on more-conservative positions.
The firm also acquired a biomanufacturing facility from a shuttered biotech company, paying $18.5 million for the 122,000-sf building at 100 Technology Way in Smithfield, R.I., in December 2022.
Going forward, Stephen Davis sees growing opportunities to pick up high-quality properties at historical discounts from owners in need of liquidity. “Distressed opportunities have finally started to bubble to the surface on, which we believe we are well positioned to capitalize,” he said.
Jonathan Davis remains the firm’s chief executive, Quentin Reynolds is chief investment officer, and Cappy Daume is chief portfolio management officer.
Davis Cos.’ previous vehicle, the $777.5 million Davis Investment Ventures Fund 4, held a final close in September 2020. The firm has raised about $3 billion across its value-added fund series, which launched amid the last market downturn in 2009.
BOSTON FIRM RAISES ALMOST $1B IN TOUGH TIME FOR REAL ESTATE FUNDS
July 16, 2024 | Boston Business Journal | Greg Ryan
Boston-based The Davis Cos. has raised $977 million to invest in real estate such as apartments, labs and warehouses, closing the firm’s largest-ever fund amid a challenging time for fundraising in the sector.
Institutional investors nationwide have turned away from real estate, instead putting their money into investments that offer close to the same return with much less risk. The $28.5 billion in capital raised by real estate funds in the first three months of 2024 was among the lowest quarterly totals since 2020, according to Preqin. No quarter this decade saw as few real estate funds closed.
Davis felt that chill with its latest fund, its fifth. The firm’s $778 million fourth fund, which closed in September 2020, was its fastest-ever fundraise. The fifth fund was by far its longest, having taken more than two years to raise. Its target had been $950 million.
In seeking out investors, the firm pointed to its almost 50-year track record and sold them on the opportunities available in a “moment of market dislocation,” said Stephen Davis, the firm’s president.
“I’ve rarely seen a better time to invest real estate capital,” Davis said. “I’m deeply appreciative of and honored by being in the position we’re in, to have access to this much capital at this moment in history.”
Those opportunities include acquiring properties simply by taking on their debt, according to Davis. The firm recently acquired Middlesex Marketplace, the shopping center across from the Burlington Mall, at a significant discount through a debt restructuring, he said.
There are also developers with well-located, well-conceived projects who need capital partners given how difficult it is to land a loan of size these days, Davis said.
The firm has a national footprint and both buys properties and develops them itself. Early investments for the fifth fund include properties in New York, Virginia and Florida, in addition to Massachusetts and Rhode Island.
Its targeted investments fall into three buckets: multifamily, industrial, and science and technology. That last category includes not just life sciences labs, but assets like climatetech and robotics facilities.
For housing investments, the firm focuses on the Northeast, looking for an “affordability sweet spot” between top-end and income-restricted housing, according to Davis. It’s eyeing the state’s MBTA Communities housing production law. The firm created a map that rates the cities and towns subject to the law based on how likely they are to create meaningful development opportunities.
“I am highly confident we will” make investments based on the MBTA law, but “we just haven’t done so yet,” Davis said.
When it comes to industrial, Davis is interested in “more of a boutique offering,” not something on the scale of a million-square-foot distribution facility, he said. A few Boston-based, industrial-focused real estate investment firms have recently had success raising funds, though demand for industrial space has cooled in comparison to a Covid-era frenzy.
One property type conspicuously not listed among its stated areas of focus? The struggling office sector. The firm moved away from office investments about a decade ago, but Davis would not rule out returning to that well again given the real estate becoming available at a deep discount.
“It is impossible to ignore what has been described as what is — or at least could be — a generational buying opportunity,” Davis said.
The fifth fund closed at $877 million, with an additional $100 million in a related investment vehicle.
DAVIS COS. RAISES ITS LARGEST FUND TO DATE IN CHALLENGING ENVIRONMENT
July 17, 2024 | Connectcre | Paul Bubny
The Davis Companies said Wednesday it had expanded its capital base by more than $977.1 million amid the real estate fund management industry’s most challenging fundraising cycle in more than a decade. Boston-based Davis has raised $877.1 million into Davis Investment Ventures Fund V, in addition to a co-investment sidecar vehicle totaling $100 million.
Fund V will seek to capitalize on market dislocations across multiple commercial real estate asset classes. In addition to properties in Massachusetts and Rhode Island, early Fund V investments include assets in Florida, New York and Virginia.
“At an historically difficult time to raise private real estate capital, the success marked by the final closing of Fund V, our largest to date, represents strong investor endorsement of our vertically integrated developer/operator platform,” said Stephen Davis, President of Davis. “We have a nearly 50-year track record of unlocking superior investment opportunities which are not widely recognized by the market, particularly at times of disruption and uncertainty.”
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.
DAVIS CLOSES ITS FIFTH REAL ESTATE FUND AFTER RAISING $977M OF CAPITAL
July 18, 2024 | Institutional Real Estate Inc.
The Davis Cos. has expanded its capital base by more than $977.1 million amid the industry’s most challenging fundraising cycle in more than a decade.
The Davis Cos. has raised $877.1 million into its Davis Investment Ventures Fund V, in addition to a co-investment sidecar vehicle totaling $100 million, 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. In addition to Massachusetts and Rhode Island, early Fund V investments include assets in Florida, New York, and Virginia.
“At an historically difficult time to raise private real estate capital, the success marked by the final closing of Fund V, our largest to date, represents strong investor endorsement of our vertically integrated developer/operator platform,” said Stephen Davis, president of Davis. “We have a nearly 50-year track record of unlocking superior investment opportunities which are not widely recognized by the market, particularly at times of disruption and uncertainty. We owe our success to the extraordinarily talented team of investment, development and management professionals who comprise our organization, wielding both a sophisticated understanding of our assets and the relentlessness that it takes to unlock their value.”
Since entering the fund management business at the height of the global financial crisis in 2009, Davis has invested heavily in building a deep and experienced bench of talent, cultivated its expertise in innovation markets such as greater Boston, exhibited broad investment acumen throughout the United States and across asset classes and strategies, and proven with sustained consistency that it can successfully invest across cycles. Davis has now raised approximately $3 billion combined across its value-add fund series platform.
“There is significant distress in the current market, and we intend to be nimble and opportunistic where we see a mismatch between pricing and risk,” said Quentin Reynolds, CIO at Davis. “We will be exploring investments across our target asset classes, with a focus on markets driven by intellectual capital, innovation, and population flows, and we will act decisively when we identify opportunity to deliver maximum value for our investors.”
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.
DAVIS RAISES $lB FOR LARGEST REAL ESTATE FUND
July 22, 2024 | Banker & Tradesman | Steve Adams
Lifting a page from its strategy during the global financial crisis in 2009, The Davis Cos. has raised nearly $1 billion to invest in real estate including distressed assets.
The Boston-based developer closed on its latest and largest real estate fund, raising $877.1 million for its Davis Investment Ventures Fund V along with a $100 million coinvestment.
Chief Investment Officer Quentin Reynolds said the company plans to invest in geographic markets driven by intellectual capital, innovation and population growth.
“There is significant distress in the current market, and we intend to be nimble and opportunistic where we see a mismatch between pricing and risk,” Reynolds said in a statement.
The fund already has invested in properties in Massachusetts, Rhode Island, New York, Florida and Virginia.
Davis Cos. previously raised $777.5 million in 2020 for its Davis Investment Ventures Fund IV for investments in the life science, multifamily and industrial asset categories.
Davis entered the real estate fund business in 2009 and closed on its Davis Investment Ventures Value Opportunity Fund I in 2010 after raising $229 million.
“We have a nearly 50-year track record of unlocking superior investment opportunities which are not widely recognized by the market, particularly at times of disruption and uncertainty,” President Stephen Davis said in a statement.
Davis currently has a 15.2 million-square-foot real estate portfolio. The firm’s largest local development opportunity is the 100-acre former ExxonMobil fuel storage facility in Everett, acquired last year for $72.5 million.
Private equity fundraising declined 10 percent from the previous year to $176.7 billion in the first quarter, Private Equity International reported.
DAVIS COS. CLOSES ITS LARGEST INVESTMENT FUND TO DATE
July 22, 2024 | CoStar | Mark Heschmeyer
The Davis Cos. has expanded its capacity for investments by more than $977.1 million with the final closing of its fifth fund — the firm’s largest haul to date.
Boston-based Davis raised $877.1 million for Davis Investment Ventures Fund V, in addition to a co-investment opportunity bringing in another $100 million. The firm seeks to capitalize on market dislocations across multiple asset classes including debt and properties.
The fund will emphasize investments in its three core property types of multifamily, science and technology, and industrial and self-storage, but will also include retail.
Davis Investments Ventures seeks to identify properties with hidden value on which the firm plans to undertake asset-level improvements.
“There is significant distress in the current market, and we intend to be nimble and opportunistic where we see a mismatch between pricing and risk,” Quentin Reynolds, chief investment officer at Davis, said in a statement. “We will be exploring investments across our target asset classes, with a focus on markets driven by intellectual capital, innovation, and population flows.”
The fund’s most recent acquisition was Middlesex Marketplace, a 38,243-square-foot retail center in Burlington, Massachusetts, purchased for $14.1 million, or about $368.69 per square foot, according to CoStar data. At the time of closing, the center was reported to be 89% leased.
In addition to Massachusetts, early Fund V investments include assets in Rhode Island, Florida, New York, and Virginia, according to the firm.
Since entering the fund management business at the height of the global financial crisis in 2009, Davis has now raised about $3 billion combined across its value-add fund series.
About Davis
Davis is a vertically integrated real estate investment, development and management firm that leverages five decades of experience, the strength of its leadership team and employees and a diversified portfolio to deliver maximum value for its investors and tenants. Headquartered in Boston and investing across the United States, Davis prides itself on taking a nimble, collaborative approach to delivering best-in-class results from complex opportunities. With $12.8 billion in gross asset value invested through real estate equity, debt and fixed-income securities, Davis today owns a real estate portfolio of approximately 15.2 million square feet of healthcare and life science, industrial, retail, office and hospitality properties and more than 5,800 residential units across the United States. For further information, visit www.thedaviscompanies.com.
Steve Coyle
Managing Director, Head of Equity Capital Markets & Investor Relations
Davis
(917) 941-6922
Nancy Lashine
Founder and Managing Partner
Park Madison Partners
nlashine@parkmadisonpartners.com
(516) 313-9778