The New Jersey Division of Investment is pulling capital out of two core US real estate funds and redeploying it into an Asia-Pacific property fund.
New Jersey is redeeming all of its $91m (€73.2m) interest in the AEW Core Property Trust as well as a partial redemption from its $400m interest in the CT High Grade Partners II fund.
The pension fund has approved a $100m commitment to SC Investment Management’s Real Estate Capital Asia Partners IV, which will be funded by the two redemptions.
Following a recent recovery in US real estate prices, New Jersey decided to rotate capital from existing managers to new opportunities. Over the past several months, the pension fund has been evaluating core investments it made between 2006 to 2008.
New Jersey is seeking to capitalise on sustained occupier and investor demand in Asia Pacific, driven by long-term demographic and urbanisation trends in the region.
The commitment to Real Estate Capital Asia Partners I will be part of a targeted $800m capital raise by SC Investment.
The fund will invest in real estate assets in select Asia Pacific markets, with a focus on Australia, greater China, Japan and Singapore.
SC Investment will invest in undervalued, under-managed and distressed properties where value creation opportunities exist.
According to New Jersey, SC Investment has been a consistent top-quartile performer. In the manager’s previous investment funds, deals generated a 35% gross IRR and 2.1x return, with proceeds of $600m.