About MacFarlane

Our Funds: A History of Investment Success

MacFarlane Partners has provided real estate investment management services to institutional investors via commingled funds and separate accounts since 1987. Selected accounts and funds are profiled below.


Core/Value-Added Investments: 1987-1999

Strategy

Acquire apartment, industrial, office and retail properties in markets nationwide that provide high and stable levels of current income with moderate capital appreciation. Proactively manage the capital structure and property operations to enhance income and appreciation returns.

Key Investments

  • 135 East 57th Street, a high-rise office building in Midtown Manhattan.
  • Legacy at Westwood, a multifamily residential property developed on Wilshire Boulevard in Los Angeles.
  • The Mall at Rockingham Park, a regional mall in Rockingham, N.H.
  • Mountain View Corporate Center, an office property in Mountain View, Calif.
  • One Embarcadero South, a multifamily residential property developed across from AT&T Park in San Francisco.
  • Pacific Corporate Towers, a three-tower office complex in El Segundo, Calif.
  • South Bay Galleria, a Redondo Beach, Calif., regional mall.
  • Trammell Crow Center, an office high-rise in downtown Dallas.
  • Tysons International Plaza, an office complex in Vienna, Va.
  • Valley Distribution Center, a Renton, Wash., warehouse/distribution center.

Clients

Managed real estate separate accounts on behalf of more than 25 institutional investors, including the AFL-CIO Building Investment Trust, the California Public Employees’ Retirement System, the Sacramento County Employees’ Retirement System, the Teacher Retirement System of Texas, and the pension plans of AT&T, General Motors, United Technologies and Verizon.

Performance

16%

average annual total return
(leveraged, before fees) on a $2.1 billion aggregate portfolio of assets managed on behalf of more than 20 institutional clients from July 1994 to March 1999, including $1.8 billion in assets taken over through a corporate acquisition in June 1994. (1)(2)

15%

average annual total return
(leveraged, before fees) on a $300 million core portfolio managed for CalPERS from December 1992 through September 1998, a period during which CalPERS’s overall real estate portfolio posted a 9% average annual total return. (1)(3)

Highlight

Ranked second among CalPERS’s 16 real estate managers in 1996 in terms of investment performance over the previous three years.

According to a study by Pension Consulting Alliance/Kenneth Leventhal & Co.

Notes:

(1) Past performance is no guarantee of future results.
(2) Annualized quarterly performance of all equity and debt assets managed on behalf of clients by MacFarlane Partners from July 1994 to January 1996 and, beginning in February 1996, by its successor entity for core assets, GE Capital Investment Advisors, through Victor MacFarlane’s departure as CEO of GECIA in March 1999. A hypothetical portfolio consisting of all assets managed by the firm that were directly comparable to those in the benchmark NCREIF Property Index posted a 15% average annualized return for the same period, exclusive of the effects of third-party leverage, compared to the NCREIF Index’s 11% total return. Such assets represented an average of 89% of the firm’s gross portfolio value during that time.
(3) Portfolio managed by MacFarlane Partners from December 1992 through January 1996 and by its successor entity for core assets, GE Capital Investment Advisors, from January 1996 through September 1998.

CalPERS Urban Venture (Urban Fund I): 1996-2009

Strategy

Invest in the development, redevelopment and repositioning of properties promoting smart growth and urban revitalization in urban and high-density suburban areas of the U.S. Also invest in the development of affordable/mixed-income housing financed through tax-exempt bond issues.

Key Investments

  • 15 Central Park West, an acclaimed mixed-use property developed across from Central Park on Manhattan’s Upper West Side.
  • 1100 Wilshire, an office high-rise in downtown Los Angeles that was converted to residential use.
  • Bay Street Emeryville, a mixed-use “urban village” developed near the eastern end of the San Francisco-Oakland Bay Bridge in Emeryville, Calif.
  • The Crossing | San Bruno (Phases I & II), the first two phases of rental apartment community developed in San Bruno, Calif., just south of San Francisco.
  • Ladera Center, a neighborhood shopping center in the Ladera Heights neighborhood of Los Angeles.
  • Metropolitan Lofts, a rental apartment community built in downtown Los Angeles.
  • Time Warner Center’s retail and garage components, which are located on the lower floors of the landmark high rise developed on Manhattan’s Upper West Side.
  • Tribeca Green, high-rise rental apartments developed in lower Manhattan.
  • The Uptown, a rental apartment community built near a public-transit station in downtown Oakland.
  • Wilshire Vermont Station, a mixed-use community built atop a subway station along the Mid-Wilshire Corridor of Los Angeles.

Clients

Single-investor joint venture with the California Public Employees’ Retirement System.

Performance

19%

internal rate of return
(inclusive of property- and portfolio-level debt) on 17 sold assets through September 2009 (1) (2)

20%

average annual time-weighted return
to CalPERS from fund inception in 1996 through June 30, 2009 — highest of 21 urban/smart-growth vehicles in which CalPERS had invested at that time. (1) (2)

Notes:

(1) Past performance is no guarantee of future results.

(2) MacFarlane Partners resigned as manager of its urban real estate venture with CalPERS in September 2009 due to a conflict of interest over a joint investment between the venture and another investor. Accordingly, it was in the mutual best interests of both CalPERS and MacFarlane Partners for the latter to resign, ending the firm’s 13-year stewardship of the venture. Client-requested appraisals undertaken in mid-2009 and booked in the third quarter (the second such external valuation in six months) reduced CUIP’s average annual return to 8% as of September 30, 2009 — the second-highest of the urban/smart-growth funds in which CalPERS had invested at that time.

Urban Fund II: 2007-Present

Strategy

Invest in the development, redevelopment and repositioning of properties promoting smart growth and urban revitalization in urban and high-density suburban areas of the U.S.

Key Investments

  • @ First, the office component of a mixed-use business park developed in San Jose, Calif.
  • 55 M Street, an office mid-rise built just north of Nationals Ballpark in Washington, D.C.
  • The Crossing | San Bruno Phase III, the third phase of a rental apartment community developed in San Bruno, Calif., just south of San Francisco.
  • The Hotel & Residences at L.A. Live, a 54-story high-rise built adjacent to the Staples Center and the LA Convention Center in downtown Los Angeles.
  • JBG Urban, a transit-oriented development portfolio of existing properties and planned projects in the Washington, D.C., metro area that includes the following assets:
    • The Alaire, a rental apartment community developed adjacent to the Twinbrook Metro station in Rockville, Md.
    • Bethesda North Marriott Hotel & Conference Center in North Bethesda, Md.
    • Element 12420, a fully renovated and repositioned office building in Rockville, Md.
    • Galvan at Twinbrook, a mixed-use community developed next to the Twinbrook Metro station in Rockville, Md.
    • North Bethesda Market, a mixed-use property built on the Rockville Pike in North Bethesda, Md.
    • Sedona | Slate, a rental apartment community developed in the Rosslyn district of Arlington, Va.
    • The Terano, rental apartments built next to the Twinbrook Metro station in Rockville, Md.

Clients

Fourteen institutional investors, including domestic and foreign pension plans, insurance companies, and a private foundation.

Performance

Anticipate first-quartile performance among opportunistic real estate funds with a 2007 vintage year. (1)

Notes:

(1) Due to various risks and uncertainties, the actual results of the aforementioned investment fund may vary from the projected results and such variations may be material.

Emerging Managers Fund: 2008-Present

Strategy

Invest in and alongside early- and mid-stage real estate operating and development companies with strong performance potential by acquiring equity stakes in the companies themselves and nurturing their growth in addition to providing investment capital with which they can pursue their investment strategies. Focus on companies active in urban and high-density suburban property markets.

Key Investments

  • Jair Lynch Real Estate Partners, Washington, D.C.
    • 2601 16th Street NW, a former Howard University dormitory in Washington, D.C., that will be renovated and transformed into a boutique rental apartment community.
    • Anthology, a rental apartment community developed along the popular H Street Corridor in Washington, D.C.
    • Half & N Streets, a planned mixed-use development that will be built just north of Nationals Park in Washington, D.C.
    • Paul Laurence Dunbar Apartments, an affordable senior housing community in Washington, D.C.

Client

Single-investor venture with the California State Teachers’ Retirement System.

Performance

On track to exceed client’s benchmark. (1)

Notes:

(1) Due to various risks and uncertainties, the actual results of the aforementioned investment fund may vary from the projected results and such variations may be material.

Urban Fund III:  2009 – Present

Strategy

Invest in the development, redevelopment and repositioning of properties promoting smart growth, urban revitalization and sustainability in urban and high-density suburban areas of the U.S.

Key Investments

  • 1 North 4th Place, high-rise rental apartments developed on the Williamsburg waterfront in Brooklyn, N.Y.
  • 2 North 6th Place, a rental apartment high-rise in Brooklyn, N.Y., that is being built adjacent to 1 North 4th Place.
  • Mark on 8th, a rental apartment community developed near Amazon’s headquarters in Seattle’s South Lake Union neighborhood.
  • Park Fifth, a two-phase multifamily residential development that will be built next to the Pershing Square Metro station in downtown Los Angeles.
  • Tam Ridge Residences, rental apartments developed on a highly accessible infill site in Marin County, just north of San Francisco.
  • Venn on Market, a rental apartment community that was developed on Market Street in the heart of San Francisco.

Clients

Three foreign institutions.