GLOBAL - The New Jersey Division of Investment has made its first investment in real estate since June of 2008 with a $100m (€74.4m) allocation to the Lubert-Adler Real Estate Fund VI-B.
Pension fund officials said one of the main attractions of the investment was that management fees would be waived during the commitment period, which ends in 2013.
Lubert-Adler is looking to raise $400m of equity for Fund VI-B. Another major commitment was made to the fund last month when the Ohio Public Employees Retirement System approved a $200m allocation.
Fund VI-B will co-invest across Lubert-Adler Fund VI and Fund VI-A. These will all be new investments housed pro-rata across Fund VI and the two co-investment vehicles.
Fund VI-B will contribute approximately 40% to each transaction, but will not invest capital in any legacy assets currently held by Fund VI.
New Jersey will have an advisory board set on Fund VI-B.
Lubert-Adler’s strategy with the Fund VI-B capital is to acquire assets at significant discounts through the distressed debt opportunities provided by the current real estate market.
Most often, this will be in conjunction with the borrower, requiring a discounted loan payoff from the financial institution holding the note and subsequent recapitalisation of the borrower/asset by Fund VI-B.
Particular assets are identified through underwriting the true value of the hard asset collateral and, in the case of transitional properties, underwriting the redevelopment or re-leasing plan.
Only assets in the US will be considered for investment by the commingled fund.