Massachusetts Pension Reserves Investment Management Board (Mass PRIM) has approved its first co-investment transaction in more than 10 years.

The pension fund will co-invest $30m (€22.1m) in One Kendall Square, a mixed-use property in Cambridge, Massachusetts that was acquired earlier this year by Divco West Properties for $395m.

Divco West bought the property for its Divco West Fund IV, to which Mass PRIM made a $100m commitment at the end of 2013.

Tim Schlitzer, senior investment officer for real estate and timberland for Mass PRIM, said: “They are a proven manager that has shown us the ability to perform with their assets.“

“This is a property that has an excellent location being very close to Harvard and MIT. The asset is now stabilised but we believe there is a reposition opportunity for the property in the future.”

The asset totals nearly 670,000 square feet with a mixture of office, retail, research and development space, and a 1,507-space parking garage.

Mass PRIM has an additional $20m of equity approved for co-investments with Divco West Fund IV.

The pension fund will continue to pursue other co-investment opportunities. It has not established a set amount of capital that will be invested for this strategy.

“The other manager that we would be considering this strategy with would be Carlyle Group,” said Schlitzer. Mass PRIM issued a $47.5m commitment to Carlyle Realty Partners VI in November 2011.

A main reason for this is the makeup of the pension fund’s $5.2bn real estate portfolio. Core separate account assets are at 64.5% of the portfolio, with value-added being at 7.6% and the balance invested in real estate investment trusts (REITS).

The last time Mass PRIM completed a co-investment deal was 10 years ago with Beacon Capital Partners on the Hancock Tower in Boston. Beacon and Mass PRIM no longer have an ownership stake in the property.

State of Wisconsin Investment Board (SWIB) plans to invest $500m in real estate for the rest of 2014.

The pension fund will focus on sector and market specialists, and invest primarily through separate account managers while limiting its commitments to closed-ended, blind-pool property funds.

SWIB intends to expand its wholly-owned investment portfolio which it stated would give it more control through its existing managers Heitman, Bentall Kennedy and Deutsche Asset & Wealth Management.

The pension fund will limit its fund investments to those with pre-specified assets.

SWIB has made $280m of new commitments to real estate so far in 2014. One was for a $150m separate account with Bentall Kennedy to invest in medical office buildings.

The was a $80m joint venture with Essex Property Trust to buy core apartments on the West Coast of the US.

Coretrust Capital Partners and Normandy Real Estate Partners have formed a joint venture to invest in office buildings along the US East Coast from Boston to Washington, DC.

The first asset has been purchased – Fair Oaks Plaza, a 180,000 sqft office in Fairfax, Virignia – and two other properties are under contract.

The strategy for the joint venture is to invest in value-add office buildings and improve properties through new leasings, renovation or repositioning.

The joint venture does not have a specific amount of capital allocated to it. Coretrust will be looking for transactions on a deal-by-deal basis.

Normandy is in the market with its latest commingled fund, Normandy Real Estate Fund III. One of its investors with a $25m commitment is the Tennessee Consolidated Retirement System.

Coretrust Capital is a real estate manager formed in 2013. It is led by three original partners of Thomas Properties Group.

 

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