BlackRock is taking over two real estate funds of funds managed on behalf of the New Jersey Division of Investment.
The multi-manager mandates are being transferred from GM Asset Management, the investment management arm of General Motors, according to a New Jersey board meeting document.
The core-plus and opportunistic funds of funds are being liquidated and are scheduled to be fully divested next year.
New Jersey hired GM Asset Management in 2008, as the General Motors subsidiary began to branch out into third-party investment management. GM Asset Management – temporarily rebranded as Promark Global Advisors in 2009 – decided to reverse its plans to manage third-party capital in 2010.
The Division of Investment, which manages the investments of seven pension funds, originally invested $81.5m (€72.9m) in the core-plus fund of funds and $25m in the opportunistic fund of funds.
The two vehicles invested in seven real estate funds and separate accounts.
Performance has been strong: the core-plus strategy returned 14.9% and the opportunistic strategy produced 15.15%.
BlackRock will charge a management fee of 45bps, less than half the 116bps charged by GM Asset Management, saving New Jersey an estimated $232,000 for the first year.
New Jersey is also investing $50m in Hammes Partners III, medical office fund.
The pension fund said the investment would help increase its exposure to the office market. Its office assets currently make up 26.5% of its real estate portfolio, below the 37.7% weighting in the NCREIF ODCE Index.
New Jersey favours medical offices. It said vacancy rates compared favourably at 8.5% compared with 11.8% for traditional offices.
Hammes is seeking a $600m capital raise for Partners III and plans to co-invest up to $12m.