North Carolina Retirement Systems has made an initial $200m (€184.4m) investment into a new Northpond Partners-managed separate account that will invest in un-anchored retail properties in the US.
The Northpond Retail Partners separate account will initially focus on assets located in the Southeast and some Sunbelt markets as it targets a net internal rate of return of 10% to 12%.
North Carolina plans to use a leverage component of between 40% and 50% for the investments in the separate account, depending on whether the current high-interest rates remain.
The pension fund’s investment management investment division staff, said: “Small strip, essential retail properties are generally internet resistant and thus have a high level of resilience to their cash flows. The small cheque size limits institutional competition and thus properties trade at a higher cap rate yield than grocery-anchored centres.”
According to published reports, the Northpond Retail Partners paid $17.4m to acquire Parkside Marketplace, a 52,948sqft asset in in Richmond, Virginia. The property has a current occupancy of 98% with a list of tenants.
Northpond did not respond to a request for comment.
The pension fund took action on its core real estate portfolio by paying off $127.3m in debt on a fully leased office building it owns.
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