UNITED STATES - Fresno County Employees Retirement Association has expanded its real estate portfolio by investing in the Colony Investors IX value-added and the Buchanan Fund VI opportunistic funds.
The pension fund has allocated $30m (€22.5m) to each strategy after a search assisted by the pension fund's consultant, Wurts & Associates.
Colony Capital is still in the infancy of fundraising for the commingled fund targeting distressed real estate and underperforming loan opportunites, but is hoping to sign approximately $1.5bn for Investors IX.
But Fresno County believes there is a benefit to investing in the commingled fund early as investors who sign up first are paid a performance rate of approximately 9% to 10% above that received by later investors.
The pension fund did have some concerns about Colony Capital using capital from Investors IX to buy debt from the real estate manager's previous commingled funds so Colony Capital not to do so, though should the situation ever need to change it will consult the pension fund for approval it became a reality.
At the same time, Buchanan has dropped the size of its equity raising for Fund VI from $1bn to $600m as there is a shortage of interested investors in the marketplace.
Fresno County will not make its commitment unless Buchanan raises at least $470m in signed commitments from other investors.
This commingled fund is designed to supply equity and debt capital to experienced operating partners who are seeking to acquire US office, retail, industrial and apartment assets needing renovation, repositioning or recapitalisation.
Fresno County had a real estate portfolio valued at $98m in Q3 2008 so had invested 4% of its $2.5bn of total plan assets in the asset class.
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