REAL ESTATE - The Los Angeles Fire & Police Pension System is expanding its activity in investing in commingled funds. The pension fund is looking at placing $90m(€68.5m) into three funds.
One of these commitments has already been approved. This was a $30m commitment to the Colony Investors VIII investment fund. The pension fund took this action at its board meeting on February 1.
Colony Capital is the real estate manager on the commingled fund. It is anticipating a $4bn raise for the fund. One of the other investors in the fund is Ohio Police & Fire Pension Fund with a $25m commitment.
Colony VIII is a high return investment fund. Investors in the fund are projected to achieve a gross IRR of over 20% and a 2.2x equity multiple.
The commingled fund will focus on deals in North America, Europe and the Asian region., with around 50% of its investments will be in Asia.
Colony Capital has a 15-year track record of investing in opportunistic related transactions.
Los Angeles Fire & Police looked at placing capital into two other commingled funds. These were AEW Value Investors II and Heitman Value Partners II. These funds were considered for investment at its February 15 board meeting, where the pension fund was considering committing $30m into each fund.
AEW Capital Management is the fund manager for Value Investors II. It is shooting to raise a total of $500m. The real estate manager will be co-investing a $15m. The expectation is that investors will achieve a gross IRR of 13% to 15% and a net IRR of 10% to 12%.
Value Investors II is an enhanced return fund. The strategy here is to buy existing assets that can be created into core properties in the future. These would be the main property types of office, industrial, retail and apartments. Strategies to improve the assets will include redevelopment, releasing and repositioning. The deals would be focused on the East and West Coasts in the US.
Heitman is now raising capital for Value Partners II. This is an $800m commingled fund. The targeted gross IRR for investors is projected to be in the range of 15% to 17%.
The investment strategy is to setup joint ventures with operating partners that focus on a single property type. All of the assets in the commingled fund will be located in North America.