UNITED STATES - New Jersey Division of Investment has agreed to commit $150m (€105.3m) to two commingled funds, to take advantage of the market capital squeeze and structured financing.
At least $100m will go into the $1,5bn Five Mile Capital Partners II opportunity fund, projected to return a 20% gross IRR or 15% net IRR on its investment, as the pension fund feels the commercial real estate securitization market is growing and evolving along with an increasing volume of higher-yielding originations and debt tranches.
New Jersey believes the risk-adjusted returns achievable through mezzanine and junior real estate debt and structured finance are an attractive risk, in part because the select distress situations can often create forced liquidations of performing assets.
The Capital Partners II fund will only invest in US assets and is expected to target mainly office, industrial, retail property and apartments.
New Jersey has committed $50m to the Tucker Development and Acquisition fund, again with a targeted aggregate gross compounded annual IRRs of 20% to investors.
This investment fund is very local, tapping opportunistic real estate in New Jersey which focus on retail developments or mixed-use projects which could have some retail with work-force residential development.