US – The Ohio Police & Fire Pension Fund has made a US$20m (€15.6m)commitment to the CB Richard Ellis Strategic Partners IV commingled fund.
The investment forms part of Ohio Police & Fire’s high-return investment strategy. It will be one of the last investors to participate in the fund as CB Richard Ellis Investors plans a final closing before the end of 2005.
The total capital raised will be in the region of $900m, of which around $40m came from another Ohio pension fund, the School Employees’ Retirement System.
Ohio Police & Fire’s expectations of a high return are based on the requirements for Strategic Partners IV. Its investors are projected to achieve leveraged IRRs in the 20% range. This yield factors in a three- to seven-year holding period.
The overall investment strategy will be to invest in all four major property classes of office, retail, industrial and residential on a value-added basis. This will include taking on some leasing risk on office and industrial deals and development risk on apartments and industrial.
The majority of the deals will be high quality assets in major markets around the US.
Access to deals remains a good selling point for CB Richard Ellis Investors. Its vertical integration with CB Richard Ellis gives the asset manager an advantage in sourcing deals.
Finding deals is a major stumbling block for many US pension funds, given all the sources of capital now looking for a home in the marketplace.
Ohio Police & Fire committed to Strategic Partners IV at its board meeting late last month.
The pension fund has designed its real estate programme with real estate consultant The Townsend Group. Frank Blaschka, a Townsend principal, oversees the account.
Ohio Police & Fire is looking at a variety of commingled funds. These include Walton Street V, Blackstone REP V and Lubert Adler V.
The pension fund has total assets of about US$10.1bn. Its real estate portfolio has a current value of US$437m. It has an 8% allocation for real estate and 4.29% actually invested in the asset class.