Mass PRIM targets close to $1bn in new property deals
UNITED STATES – Massachusetts Pension Reserves Investment Management Board (Mass PRIM) has $989m (€760m) of real estate deals in the pipeline following the leveraging of its real estate portfolio to free up more investment capital.
The institutional investor has eight real estate acquisitions on its radar through its six separate-account managers, the capital for which has been made available by doubling the gearing on its existing portfolio from 15% to 30%.
The eight deals earmarked will be pursued by JP Morgan Asset Management, TA Associates Realty, Invesco Real Estate, LaSalle Investment Management and AEW Capital Management.
Mass PRIM recently acquired acquired an industrial property in Dallas for $60m through AEW Capital, but the pension fund has had limited success in the first three months of 2013 in finding appropriate core investments.
As a result, Mass PRIM is now looking to widen its search criteria. Tim Schlitzer, senior investment officer at Mass PRIM, said: "We are now looking at the risk-reward benefits with our separate-account managers about investing capital in secondary markets."
Asked what he considered a secondary market to be, Schlitzer said "I know it when I see it".
He explained: "For me it means investing capital outside of the top-10 markets in the country. This would mean outside of places like New York City, Boston, Washington and San Francisco."
Mass PRIM will target assets in the office, industrial, retail and apartment sectors in the US through its separate-account managers and the pension fund will make the final call on all deals.
The leveraging of the pension fund's $4.8bn property portfolio generated $1bn in debt proceeds.
According to documents, the debt comprised a $500m unsecured-term loan and a $500m private note. The refinancing resulted in an aggregate borrowing cost of 2.91% and a weighted average maturity of 7.3 years.