Two Illinois pension funds are to invest in Starwood’s latest global opportunistic real estate fund, having both invested in its predecessor.
Teachers’ Retirement System of the State of Illinois and Illinois Municipal Retirement Fund have approved commitments worth $300m (€220m) and $50, respectively, to the Starwood Global Opportunity Fund X
Both pension plans invested $150m and $40m, respectively, to the Starwood Distressed Opportunity Fund IX in 2013.
Starwood Capital Group made a first close for the new fund earlier this year with $2bn in capital commitments, according to industry sources, and is seeking to raise a total of $4bn to $5bn.
Approximately half of the fund is expected to be invested in Europe, including Spain. Starwood has built up a significant presence in Europe to look for investments with 30 people on the ground.
The real estate manager also owns Hatfield Philips, a major loan servicer in Europe, which should help Starwood source deals.
Fund X will also be investing around 40% of the capital in the US and the balance in other areas around the globe.
The targeted returns for the commingled fund are 14% to 16% net and 18% to 20% gross. Starwood will be investing $75m of its own capital into the fund as a co-investment.
The fund will invest across property types, including apartments, hotel, retail, office and land, and can make a mixture of debt and equity investments.
The loan-to-value on the portfolio could vary from the 50% to just above 60%.
The structure of the investments will include distressed debt, value-add and income assets and corporate opportunities.
Illinois Teachers has also approved another new real estate commitment: a $100m allocation to the Carlyle Realty Partners VII.
Carlyle is seeking to raise $3bn in capital for its opportunistic commingled fund, targeting office, industrial, retail and apartments in the US.
