REAL ESTATE - The New Jersey State Investment Council has approved investments into four new commingled funds that amounts to $350m of capital.
There were two commitments made of $100m into the TA Associates Realty Fund VIII and the Warburg Pincus Real Estate Fund I.
There were two other commitments of $75m each, for the RLJ Lodging Fund II and MacFarlane Urban Real Estate Fund II. The made the decision at its July 20 board meeting.
TA Associates Realty is the fund manager for Realty Fund VIII. The total equity raise for the fund is $900 million to $1 billion. Investors in the fund are projected to achieve gross returns of 15% to 16% before fees. It looks for value-added investment opportunities nationwide, particularly on the East and West Coasts. Most of the deals will be with office and industrial properties. There will be some deals with apartments and retail.
Warburg Pincus, LLC is now raising capital for its first dedicated real estate fund. The commingled fund will zero in on growth and value creation transactions. It will look for deals in the US and internationally. North America and Europe will make up 50% and the other 50% will be in Asia led by China and India. Warburg Pincus and its employees will be committing $40 million to $50 million to invest into the fund.
The RLJ Fund will be New Jersey’s first investment in a hospitality fund. This entity is managed by RLJ Capital Partners. The co-investment from the fund manager to the commingled fund is $22.5 million. This amounts to 3% of the commingled fund’s projected total equity raise.
The fund manager has attracted many repeat investors for its second fund, with many of them investing more. One example of this is the California Public Employees Retirement System. It invested $75 million into the first fund and $100 million into the second one. Other investors are California State Teachers Retirement System, the pension fund of GE and the state pension funds of North Carolina, Georgia and Connecticut.
Around 91% of the assets in Lodging Fund II have been pre-specified. This was accomplished through an off-market acquisition of 100 hotels in a transaction value at around $1.7 billion. The assets are hotels just below the luxury level. They are located in a variety of states around the country. Two of the bigger concentrations are in Illinois and New York.
The investment in MacFarlane Real Estate Fund II with allow New Jersey to invest some capital in its home state. The investment strategy is to invest in urban development and redevelopment opportunities. The fund manager will be looking at some New Jersey markets for this fund. These would include Newark, Harrison and Jersey City.
Prior to this commingled fund, MacFarlane had put together this investment strategy for a single client, The California Public Employees Retirement System. This public pension fund will also be investing in the new fund to the tune of $100 million to $150 million. MacFarlane will be contributing $20 million of its own capital to the new fund. This amounts to 2% of the total equity raise of the fund.