REAL ESTATE - The Alaska Permanent Fund Corporation is to acquire a 50% interest in Simpson Housing Corporation which is currently held by the State of Michigan Retirement System.
The transaction is set to close by the end of March. The size of the deal is projected to be in the neighbourhood of $500m (€421m).
To pay for the Simpson transaction, Alaska will be selling a good portion of its current portfolio. This includes a lot of office buildings and retail properties.
Upon completion of the Simpson transaction there will be three companies holding a position the corporation. Both Alaska Permanent Fund and State of Michigan will own 46%. The other 8% would be held the senior employees of Simpson Housing.
Michigan has valued the assets up for sale in Simpson at $454.6m. The pension fund is selling three kinds of real estate. There is an existing portfolio of core assets of 56 apartment complexes totalling around 19,200 units. There is also a large contingent of affordable housing complexes of more than 250 properties.
Simpson is also an active developer of new apartment complexes. It holds a development pipeline which could build around 2,000 units. The company as a whole owns assets in several states. This includes properties in Texas, Pacific Northwest and Southeast.
Alaska Permanent Funds real estate investment officer Dave Stewart said: "We believe in the people in Simpson Housing and the job they have done to perform well with the existing portfolio. They also have a solid growth planned for the future."
Alaska plans on re-balancing its real estate portfolio to pay for its acquisition of Simpson Housing. The pension fund now has a real estate portfolio valued at $3.5bn. This amounts to 10.4% of its $33.5bn of total assets.
