Nebraska expands real estate investments with Landmark, UBS

The Nebraska Investment Council has increased its relationships with Landmark Real Estate Partners and UBS Realty Investors with new commitments totalling $100m (€94.4m).

The pension fund made investments of $60m into the UBS Trumbull Property Income Fund and $40m into Landmark Real Estate Partners VIII.

Michael Walden-Newman, state investment officer for Nebraska, said: “We have a very good relationship with both of these managers and have been pleased with their investment performance. There was no need to look elsewhere to add to our manager list.”

The pension fund made both commitments on the recommendation of Aon Hewitt.

Landmark Partners is targeting a $2bn capital raise for Partners VIII, making a $5m co-investment in the fund.

Leverage will be no more than 70%.

The overall investment strategy is to acquire limited-partnership interests in existing funds, partnerships and other structured entities invested in underlying real estate.

Up to 30% of the fund, which will target a 15%-plus net IRR, can be invested outside the US.

The $2bn UBS Income Fund is one of the few core open-ended funds in the US that has a debt component.

It invests primarily through participating mortgages.

The fund structures its loans to receive interest on the loan, a share of the property’s operating cash flow and a share of the appreciation of the property.

The capital from Nebraska will not go into the fund immediately.

According to a board-meeting document, there is currently a 3-5 quarter queue in the fund’s registered interest list.

The Income Fund has an investment objective to provide a 5% real return on a 3-5 year basis and an 8-9% net return over a full market cycle.

The fund is 71% invested in apartments, 15% in retail, 6% in industrial and 8% in hotels.

Nebraska started its relationship with Landmark in 2010 with a $40m commitment in Real Estate Partners VI and made a $50m commitment into Partners VII in 2014.

The net IRRs for these two funds as of June of this year were 22.5% for Partners VI and 44% for Partners VII.

Nebraska made an initial $60m commitment into the UBS Income Fund in 2014, an investment that has produced a net IRR of 10.78% since inception.