UNITED STATES - New Jersey Division of Investment approved $320m (€261m) for new opportunistic real estate strategies managed by Real Estate Capital Asia Partners (ReCap) and Och-Ziff Capital Management Group.
The $69.9bn US institution will commit $120m to ReCap's latest fund targeting dislocation in Asian markets, while hedge fund manager will receive $200m for real estate investments as part of a wider separate account.
According to board meeting documents, ReCap III fund was recommended due to the manager's demonstrated capability to generate top-decile returns in various real estate markets throughout Asia.
The previous fund, ReCap II, was the top-performing fund of all 2008 vintage opportunity funds, the pension fund said, and the manager has returned 96%, or $373m of the $389m of equity invested in ReCap II and I.
The new fund, which has a projected gross internal rate of return of 30.4%, will target real state assets and entities in Greater China, Indonesia, Japan, Singapore, South Korea, Thailand and Vietnam.
It was also deemed that New Jersey Division of Investment was underexposed to Asian real estate, and the pension fund will place $80m directly into ReCap III and will reserve up to $40m for co-investments on individual deals alongside the fund.
The pension fund has also allocated €200m to real estate strategies as part of its $600m separate account with Och-Ziff, which also covers investments in credit and real assets.
New Jersey's investment staff will retain significant input into the separate account transactions, including full veto rights on private investments and the ability to suspend the investment period at regular intervals. The pension fund is able to adjust the commitment amounts to the most attractive investment opportunities.
The pension fund is below its 5% target allocation to real estate, with $3.19bn invested in the asset class at June 2012, or 4.6% of its total assets under management.
