UNITED STATES – Contra Costa County Employees Retirement Association (CCCERA) has approved commitments totaling $150m (€112m) into distressed real estate funds targeting European opportunities.
Over half of the new commitment was allocated to the Siguler Guff Distressed Real Estate Fund II, which received $80m from CCCERA. According to documents prepared for a recent board meeting, the fund acknowledged that Siguler Guff may potentially allocate a larger portion of the fund to Europe than it did in its previous fund as the manager viewed Europe as offering a significantly larger number of opportunities due to being several years behind the US in dealing with distressed assets.
The potential reallocation of Fund II marks a significant change over the inaugural fund. Of the 22 investments made by Siguler Guff for the first fund, only two were placed into European funds.
Fund II aims to identify and exploit areas of market inefficiency and capital “starvation” and will consider investing in the US, Europe, Brazil, Russia, India and China – both through fund of funds and co-investments.
Siguler Guff is targeting a capital raise of $600m and an 8% per annum return for limited partners. The manager will itself invest at least a $3m into the fund.
Contra Costa County also made a commitment of up to $70m into the Oaktree Real Estate Opportunities Fund VI, targeting a $2bn raise with a $2.5bn cap.
Oaktree will itself commit between $20-$100m to the fund and has already completed 22 investments for Fund VI. Commercial real estate claimed half of invested capital, but other major investment types include 22% in residential real estate and 16% in US Federal Deposit Insurance Corporation and Bank portfolios. It will additionally target other funds investing in commercial mortgage-backed securities and corporate real estate, including REIT shares.
Meanwhile, the New Mexico Educational Retirement Board (NMERB) has approved a $50m commitment into the Raith Real Estate Fund I. This fund is managed by Raith Capital Partners and it will focus on investing capital in distressed debt collateralised by commercial real estate in the United States.
The fund’s investment staff stated in documents prepared for a NMERB board meeting that investment opportunities remained within the distressed debt field – mainly due to the low volume of loans available for commercial real estate.