The Massachusetts state pension fund said it has agreed to buy 21 acres in Silicon Valley for $112.3 million — its first-ever direct investment in real estate.
The property, located on Great American Parkway in Santa Clara, Calif., is home to three leased office buildings. Under the deal, the $62 billion Massachusetts Pension Reserves Investment Management fund will receive $4.6 million annual lease payments on the land from the buildings owner, the Santa Clara Redevelopment Authority.
By purchasing and owning the land directly, rather than through an investment manager, PRIM stands to save approximately $11 million in fees over the next 20 years, according to Michael G. Trotsky, the fund’s executive director and investment chief.
“This is precisely the sort of innovation and efficiency we have been aggressively seeking” and will continue to pursue, Trotsky said in a statement.
The pension fund last year walked away from a $56 million bidding war on a parking garage in Boston’s Seaport area. PRIM has $6.5 billion of its assets in real estate overall.
The Santa Clara property has three five-story office buildings that were built in 2013, with a total of 449,000 square feet of space, the pension fund said. They are currently leased to high tech companies — including Dell Inc., by the Irvine Co. —which owns the buildings. As of Dec. 21, PRIM is Irvine’s landlord.