UNITED STATES – Ohio Police & Fire Pension Fund is considering being a founding investor in a new open-ended core fund managed by USAA Real Estate Company.
The pension fund will decide at its next board meeting, on April 24, whether it will commit capital – likely to be in the region of $35m (€27.3m) to $50m – to the USAA Eagle Real Estate Fund.
The real estate arm of insurance group USAA will be seeding the fund with a $418m portfolio made up of nine investments and 40 individual assets. The properties are located in markets included Atlanta, Washington DC, St Louis, Houston, Santa Monica and San Francisco.
According to industry sources, Ohio Police & Fire could benefit from reduced fees – by as much as 50% – for being a founding investor. It is the first open-ended fund to be brought to the market by USAA Real Estate.
The fund will include a combination of core and non-core assets, although USAA Real Estate aims to increase the weighting to core over time.
In the short-term, non-core assets will represent 30-35% of the portfolio, taking into account current development projects, but USAA Real Estate will seek to reduce this exposure to a maximum of 20%.
The fund manager will invest in class-A assets in the apartment, office, retail and industrial sectors in growth markets in the US.
The fund is projected a gross return of 11.7% over the first three years.