The Maine Public Employees Retirement System (Maine PERS) has approved its first ever acquisition of a limited partner position in an existing commingled fund from an investor on the secondary market.
The pension fund approved a commitment of up to $25m ($18.2m) into the Westbrook Real Estate Fund IX at its 19 February board meeting.
Andrew Sawyer, CIO at Maine PERS, said: “We are a believer in the strategy and the management team of Westbrook Partners.
“Our thinking here is that some investors in the commingled fund might need to trade their position in the fund for either being over-allocated to real estate or need some liquidity.”
He added: “We have done this in the past in the private equity asset class – we think this can also work for real estate.”
Sawyer himself made the recommendation for the commitment, together with input from the pension fund’s real estate consultant, ORG Portfolio Management.
Westbrook Partners closed in the fall of 2012 on the $1.6bn equity raise for Real Estate Fund IX.
Investors in the fund included $150m from the Teacher Retirement System of Texas, $50m each from the New York State Teachers Retirement System and the State of Wisconsin Investment Board and $15m from the University of Michigan Endowment.
When the fund closed, the projected return for the limited partners was a gross IRR of 18%.
Fund IX is an opportunity fund aiming to invest in major markets in the US and Europe.
Maine PERS is planning to invest more capital in real estate going forward.
“We are planning to invest additional capital in this asset class this year,” Sawyer said.
“At the end of 2013, we had invested 6.4% of our total plan assets in real estate. We have a targeted allocation for the asset class of 10%.”
Westbrook will soon begin the marketing phase of Westbrook Real Estate Fund X.
The targeted capital raise is $2bn.
The global opportunity fund will be investing in the gateway cities of London and Paris in Europe and Boston, New York, San Francisco and Los Angeles in the US.