Louisiana Teachers sets aside $125m for senior housing, distressed debt

The Teachers’ Retirement System of Louisiana has approved $125m (€113m) in new commitments into senior housing and distressed real estate debt.

The pension fund is to invest $50m into AEW Senior Housing Investors III and $75m into Lone Star Fund X.

The targeted $500m capital raise by the manager would be the largest capital raise it has done for its senior housing fund series. 

Its other two funds had total capital raises of $371m, for Fund II in 2012, and $1188.2m, for Fund I in 2009.

AEW is planning to invest 50% of the capital for Fund II into development properties. 

This is due to the attractive risk-adjusted returns associated with building from the ground up, rather than modernising outdated assets.

Fund III is targeting a 12-13% net IRR, with leverage expected to remain below 65%.

AEW will be investing in a mixture of independent/assisted living and memory care senior housing. 

All of the capital will be invested in the US, targeting primary and secondary markets exhibiting strong supply/demand fundamentals and demographics.  

AEW will invest through joint ventures with operators, often on a repeat basis.

Meanwhile, Lone Star is planning a $6bn capital raise for Fund X, targeting a 25% gross IRR.

Lone Star will invest in a broad range of distressed deals involving financial and other investment assets. 

Fund X has a global strategy, seeking opportunities in North and Latin America, Europe and Asia.

Louisiana Teachers is also looking into the possibility of making an allocation into domestic/global REITs for the first time ever. 

No decision has been made as to how much capital might be allocated for this strategy.

The pension fund is unlikely to make a final decision on this until some time in the first quarter of next year. 

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