UNITED STATES - Los Angeles County Employees Retirement Association has further diversified of its assets into hotel investments, and approved a $100m (€64.5m) commitment to the Starwood Capital Global Hospitality Fund II.
LACERA has now made commitments totaling $250m into hotel commingled funds over the past few months, having previously invested $150m in the Cornerstone Hotel Income & Equity Fund II. (See earlier IPE Real Estate story: LACERA books £250m into hotels and Reits)
This latest move was made at its board meeting on June 11 following guidance from real estate consultant, The Townsend Group, said John McClelland, principal investment officer for real estate for LACERA.
"We wanted to expand our hotel investment platform to a global level. This commingled fund was one of the few funds that had this capability. Starwood Capital Group, as a company, is a proven player in investing in hotels on an international basis," said McClelland.
Starwood hopes to raise approximately $3bn for Global Hospitality Fund II and will make a $20m co-investment to the commingled fund, with a view to achieve net IRR of 16% for investors, on up to 75% leverage.
Investments will be divided across the globe but approximately one-third will be invested in US hotel assets, and officials are looking to invest capital in all segments of the hotel industry as well as considering both new and existing projects.
Likewise, Starwood is not restricting itself to developed markets as the fund intends, for example to invest capital in budget economy hotels in emerging markets such as China and India.
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