REAL ESTATE - The Illinois State Board of Investment has approved a $30m commitment to the MacFarlane Urban Real Estate Fund II, L.P.
The fund took this action at its board meeting in mid September. It was assisted in its real estate decision by its real estate consultant, The Townsend Group.
Illinois State will be investing with a leading player in the urban investment strategy. MacFarlane Partners is one of the top firms investing in urban real estate across the United States. Prior to this commingled fund, the real estate manager has invested capital in the marketplace for a single investor, The California Public Employees Retirement System. The total amount invested has been $1.1bn in equity and equity equivalents in 25 qualified individual urban assets valued at more than $5.7bn.
Other state pension funds will be participating in the Urban Real Estate Fund II. The New Jersey State Investment Council has committed $75m to the fund. CalPERS is looking at investing $100 to $150m into the fund.
MacFarlane will be making a $20m commitment to the fund as a co-investment. Projected returns for the fund are a leveraged IRR in the range of 16% to 18%.
The investment strategy for Urban Real Estate Fund II is to place capital in urban properties. This could be straight acquisitions, investing equity in new development or redevelopments. These deals would include retail, residential and mixed-use projects.
MacFarlane plans a national investment strategy. It will be looking at many of the major metropolitan markets across the country. Some of the key factors that it considers are population density, improving demographics, barriers to entry, complex land-use regulations and entitlement processes, under served niches and strong public and private commitment.