REAL ESTATE - Ohio Public Employees Retirement System has decided to grant Great Point Investors a new annual real estate allocation of $200m.
The real estate manager figures that it will use leverage to the amount of 40% at the portfolio level. It expects to receive a similar annual allocation from the pension fund for the next two to three years.
Great Point Investors has been given full investment discretion on this capital. This means that the real estate manager has the ability to find properties to buy and have a closing without an approval from the pension fund.
The real estate manager has bolstered its acquisition staff with the anticipation of conducting more business with Ohio PERS. Bill DiFrancesco will be joining the firm this month as a senior vice president of acquisitions.
The vast majority of his duties will be seeking deals for the Ohio PERS account. He has a great deal of acquisition experience from Cabot Properties, a leading buyer and investor of industrial properties based in Boston.
The investment mandate for the new allocation will be to invest in value-added and core transactions. Great Point Investors has defined value-added properties as those that are less than 70% leased.
The real estate manager will be looking for both office buildings and industrial properties. The return requirements are 7% to 8% IRR on core deals and a low teens IRR on value-added purchases. These yields are based on a holding period running from three- to five-years.
Some of the Ohio PERS capital will be invested in development transactions. Some of the these could be with spec projects.
Great Point Investors will be investing in 12 markets around the country. These markets have been identified based on research supplied by Torto Wheaton. One of these figures to be Austin, Texas.
