UNITED STATES - California Public Employees Retirement System has allocation $859.8m (€587.9m) of new real estate investments in commingled funds containing a mixture of local and international real estate, and debt.
Two of the investments had an international flavor as a $92m euro commitment was placed with NIAM fund IV - a value-added investment fund expected to achieve a 15-16% net return - followed by a $200m commitment to the IL & FS Fund II.
The total equity raise on NIAM VI is anticipated to be €700m with a total capitalization of €2.5bn-€3bn, invest in new and existing office, retail and logistic properties in European countries such as Norway, Sweden, Finland, Denmark as well as some emerging markets like Estonia, Latvia and Lithuania, to generate a projected return of 20% net IRR.
The IL&FS fund II, meanwhile, invests capital in new development projects across India where there is already a lot of existing institutional quality existing assets but where officials say it makes more sense to create your own product of apartments, office buildings and retail space.
These commitments by CalPERS are reflective of the kind of investments it wants to make in the future as it announced last summer the fund has a long range goal of investing up to 50% of its real estate portfolio under an international real estate strategy.
That said, CalPERS is still placing some additional capital into other kinds of commingled funds such as structured debt and urban real estate.
Two of the new commitments were to structured debt, including an allocation of $100m into Guggenheim Structured Real Estate Fund III - projected to achieve a net IRR in the range of 12% to 14%.
The other commingled fund was JER US Debt to which CalPERS has approved an allocation of $200m in the hoping of attaining a 13-15% net IRR.
The remaining $225m allocation was place in this round of funding to the Canyon Johnson urban fund III - a $750m commingled fund that invests in US urban real estate, to generate returns of 16-18% net IRR.