REAL ESTATE – The California Public Employees Retirement System has recently invested capital into hospitality and urban investment funds.
One of the investments was a $200m commitment into the TGP Hospitality Investments IV, L.P. CalPERS expects that it will achieve a net IRR of 18% on this investment. This return factors in a three- to seven-year holding period.
The person who looks at hotel investments for the pension fund is Randy Pottle, portfolio manager. He said, “We think this fund gives us the opportunity to invest in some good hotel properties across the country with a very strong operating company. They have a proven track record from their previous investment funds.”
TGP Hospitality Investments IV is an investment fund managed by Cranston, Rhode Island-based The Procaccianti Group. The lead person is Vice President of Asset Management Bill Walker.
The investment strategy for the fund is to look at a variety of deals. This would include the acquisition of existing hotels that need to be renovated. Some of the transactions will be investing equity for the development of new hotels. There are no assets in the fund at this time.
CalPERS is going to continue to look at investing capital into the hospitality sector. Pottle said, “We will continue to evaluate hospitality investment funds for the future. Our thinking is that the property type could be a good area to place more capital into.”
The pension fund has invested with two other hotel investment funds. These were with fund managers RLJ Capital Partners and Starwood Capital Group.