San Francisco ERS targets Europe via Tristan, Westbrook funds
San Francisco Employees’ Retirement System is investing in two real estate funds targeting Europe as it begins to build its exposure to the region.
The pension fund has approved a €100m (€89m) commitment to the European Property Investors Special Opportunities (EPISO) IV, a fund managed by Tristan Capital Partners, and €50m to the Westbrook Partners’ Real Estate Fund X.
The move comes soon after San Francsisco ERS made its first allocation to European real estate earlier this year, committing €100m to a Nordic real estate fund managed by NIAM.
According to board meeting documents, there is an opportunity in Europe for value-add real estate managers to invest in out-of-favour assets at attractive prices, improve them and sell into a highly liquid market.
Tristan is targeting a €950m capital raise for the fund, with a hard cap of €1.5bn, the pension fund said.
Tristan did not comment.
The pension fund said the manager will co-invest of 1% of aggregate commitments up to a maximum of €10m. A first close of the fund is expected later this month.
The pan-European fund is expected to use around 60% leverage and will target net returns of about 15%.
Westbrook Partners’ Real Estate Fund X is pursuing an international strategy, according to San Francisco ERS, and will invest 40% of its capital in western European markets. Roughly half of its investments will be made in US, with 10% expected to be allocated ot Japan.
Westbrook Partners is looking to raise $2.5bn, with leverage kept below 50%, which, according to the pension fund, is lower than other opportunity funds that commonly use leverage as high as 70%.