REAL ESTATE- The Ohio Public Employees Retirement System is on its way with its investment plan for investing in international real estate.
The pension fund has now made commitments to three international investment funds. These are $80m to Blackstone Real Estate Partners International II, $52m to CB Richard Ellis Strategic Partners UK Fund II and $73m to LaSalle Asia Fund.
Ohio PERS made a policy decision earlier this year that it wanted to invest $200m to $300m in international real estate for its investment plan for 2006. It will be doing this by placing capital into commingled fund investments. There will be no separate accounts established for this part of its real estate portfolio.
The international real estate strategy was created to assist the pension fund in its search for higher investment returns. There are some people in the US pension fund real estate industry that believe the difference in returns for international versus domestic real estate can be 100 basis points.
The Blackstone Group is the commingled fund manager for its Real Estate Partners International II fund. The investment fund focuses on assets in western Europe.
It will be looking at two kinds of investments. One is to invest in the major property types of office, industrial, retail and lodging. Blackstone will also be considering some deals investing in real estate operating companies.
CB Richard Ellis Strategic Investors is the real estate manager for Strategic Partners UK Fund II. This commingled fund has a focused investment strategy. This is to buy value-added office buildings in regional markets around the United Kingdom. The projected returns for investors are a 18% to 20% gross IRR.
Asia Fund II is an investment fund managed by LaSalle Investment Management. Anticipated returns for investors is a net IRR in the range of 18% to 20%. This yield assumes a three- to five-year holding period.
LaSalle will be looking for assets in Japan, Korea, Singapore and Taiwan. The property types that it wants to invest in include office, retail, hotel and residential.