(To read more on the debt and equity markets, click here.)

HOUSTON-Lionstone Group and CalSTRS have set a $100-million equity fund into motion with the acquisition of a class A office building in Omaha. As the portfolio builds, CalSTRS can boost its contribution to $500 million with Lionstone kicking in 1% of the total tapped equity.

The JV is using a 50% leverage formula, setting up an initial $200 million of buying power for Lionstone Cash Flow Office Two. The fund, which could be inflated to $1 billion, targets high-occupancy office buildings of any age in all US markets.

The fund is a follow-up to Lionstone’s $75-million Cash Flow Office One, a joint venture with the Oregon Public Employees Retirement Fund, which is fully vested, also through office buildings. “We wanted to pull another fund together just as we were finishing out the Oregon fund,” says Dan Dubrowski, principal and founder of Houston-based Lionstone Group.

Dubrowski says the CalSTRS partnership was finalized in the second quarter, but the Omaha purchase is the official firing pin. The JV’s first deed is the 128,000-sf One Pacific Place, a fully leased, eight-story office building at 1125 S. 103rd St. Morgan Stanley’s Glenborough Realty Trust was marketing the asset for $25 million to $30 million.

“This asset is typical of the size and value we’re looking at, and with six or seven of these assets to fill the fund, we’re looking at a 12- to 18-month investment period for this one,” Dubrowski tells GlobeSt.com. Leasing and property management will be outsourced to local companies.

Acquisition criteria include high occupancy, a strong location within its submarket and credit tenants. Dubrowski says they are looking at buildings in Chicago, South Florida and Southern California, but nothing else is under contract at this time.

Dubrowski says “where” an asset is located in the US isn’t as important as its strength in the submarket. “Sometimes you find great buildings in secondary markets or you find buildings that other investors might be nervous about in great markets because of potential roll,” he points out. “We understand locations and that’s why we’re here. If you have a location right, even if a tenant moves out, it can be re-leased quickly.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.



Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.