REAL ESTATE- The New Jersey Division of Investment has approved real estate investments totaling $150m (€115m) into two commingled funds.
One of these was a $100m allocation into the Prudential Property Investment Separate Account II. This is a commingled fund that is managed by Pramerica Real Estate Investors.
The commitment made by New Jersey will not be actually going into the fund until no earlier than June. This is a situation that is common with many of the large open-ended commingled funds. They have too much existing cash in their funds and need to get this capital invested first being any new contributions will go into the fund.
The commingled fund is commonly known as PRISA II. The commingled fund has an enhanced return investment strategy. Some of its deals will be investing equity in new development projects. These are done in conjunction with strong development partners located throughout the US.
New Jersey is expecting that PRISA II is now open to new investors. Unlike all the other open-ended commingled funds, PRISA II is not open for subscription all the time. It is open every couple of years.
PRISA II was first formed in 1980. Its gross assets are now at $5.2bn. Pramerica has made 98 investments for the commingled fund. It has invested in a variety of property types. This includes industrial, retail, apartments, office, hotel and land sectors. The commingled fund has a low leverage component in the range of 17% to 20%.
The commingled fund has geographical diversity. Some of the top performing assets in the portfolio are located in Northern California and Washington, D.C.-Northern Virginia.
New Jersey has approved an investment of up to $50m for the Capmark UK Realty Partners, L.P. This commitment can’t exceed more than 25% of the total equity commitments for the fund.
Capmark Investments is the manager of UK Realty Partners. It’s expecting a total equity raise of $215mn. The real estate manager is an indirect subsidiary of Capmark Financial Group. It will co-invest 20% or $43m into the fund.
UK Realty Partners is a value added fund. It will be looking for properties in the United Kingdom. New Jersey is expecting to achieve a net annual IRR in excess of 14% for its investment in the fund. Capmark Investment figures it will be using 70% leverage on the fund.
Around 50% of the commingled fund has pre-specified assets. These assets are split up with 33% in retail, 51% office, 14% industrial and 2% retail. These transactions were acquired by Capmark since December 2005 and were contributed to the fund on a cost basis.