UNITED STATES - New Jersey Division of Investment maybe investing as much as an additional $15m (€10.2m) of capital into the Morgan Stanley Real Estate Fund VII Global commingled fund.
This capital is part of request by Morgan Stanley Real Estate for all limited partners in the fund to make additional contributions from time to time, up to a maximum aggregate equal to 10% of the aggregate capital contributions funded by the limited partner.
The additional funds will be used by the real estate manager to enable the commingled fund to preserve or enhance the value of existing investments, to pay or establish reserves for management fees and expenses, to repay indebtedness or satisfy the fund's outstanding obligations on the full investment amount.
Pension fund officials at New Jersey believe "it's a prudent move on their part as the reserve is intended for use only if needed to preserve the value of the existing investment and there's no indication that this will ever be necessary".
New Jersey is still planning to keep its $150m commitment to the fund as discussed at this board meeting in June.
Real Estate Fund VII Global is a massive opportunity fund thought to hold investor funds in the region of $10bn-$12bn.
The projected returns of at least 20% gross IRR is slightly different as it gives 9% preferred return for investors, followed by a 60/40 catch-up and a 20% carried interest-based on a net profit.
Morgan Stanley is expected to make a co-investment of 10% of the commingled fund's total commitments, capped at $500m.