New Mexico Educational Retirement Board has approved a $125m (€90.4m) commitment to the Kildare European Partners I fund. The fund will target opportunistic investments in distressed European real estate.
New Mexico will split the commitment into two asset classes; $25m for real estate and $100m for the opportunistic credit sector. In a board meeting document, New Mexico cited International Monetary Fund data pointing to the need for European banks to shed between $2.6trn to $4trn of assets over the next decade.
Sizable levels of non-performing loans could, the plan said, provide deal flow for Kildare’s fund. The pension fund stated according to data from PriceWaterhouseCoopers that for 2012 this included €179bn in Germany, €167bn in Spain, €164bn in the UK, €135bn in Ireland, €125bn in France and Italy and €57bn in the Netherlands.
Kildare’s fund has, New Mexico said, hit its target fund size of $1.5bn, with a maximum fund size of $2bn. Kildare has plans a second and final close for the fund, which is “significantly” oversubscribed.
Mark Canavan, head of real assets for New Mexico Educational, said that Kildare founder Ellis Short had been approached for several years to create a European distressed debt platform, but had waited for the right timing.
New Mexico has also approved new allocation of $60m with its existing REIT manager in the US, Brookfield Investment Management. Assets in the portfolio total $139m. The benchmark for the portfolio is the MSCI US REIT Total Return Index. Returns on the Brookfield managed portfolio on a gross basis have been 7.79% year-to-date, 9.98% for one-year and 14% since inception in June 2011.