REAL ESTATE- The Ohio Police & Fire Pension Fund has approved a $25m (€18.5m)investment into the Colony Investors VIII, L.P.
The pension fund took this action with some assistance from its real estate consultant, The Townsend Group. The person working on the Ohio Police & Fire account for the company is Principal Frank Blaschka.
Colony VIII is a high return investment fund. It’s expected that investors in the fund will achieve a net return in excess of 16%. This return is based on a long-term holding period. This fund is projected to deliver a 1.9x equity multiple.
Colony VIII has an annual investment fee of 1.5% for the limited partners with commitments of less than $75m. This translates to costing the pension fund $450,000 a year.
Colony Capital is the real estate manager of Colony VIII. The company figures that this commingled fund will be a $4bn investment fund. There will be 75% leverage placed on the fund.
Colony VIII has an international investment strategy. The commingled fund will be looking for transactions in North America, Europe and the Asia Pacific regions. Colony Capital anticipates that 50% of its investments will be placed in Asia. Some of the markets it will be looking at in Europe include France and Germany.
Colony Capital has a 15-year track record of investing capital in opportunistic related transactions. The commingled fund should complete 10 to 14 deals a year with an average equity investment of $160m each. All of the main property types and hotels will be considered.
Ohio Police & Fire has a real estate portfolio valued at $545m as of December 15, 2006. This amounts to 4.7% of the pension fund’s $11.7bn of total assets. The long-term targeted allocation for real estate is 8%. Some of its previous commitments to commingled funds have not been funded yet. These include The Strategic Property Fund of JPMorgan Asset Management and PRISA of Pramerica Real Estate Investors.