REAL ESTATE - The School Employees Retirement System of Ohio has approved commitments into two commingled funds. These were Colony Investors VIII and CB Strategic Investors Europe Fund III.
The pension fund made an allocation of up to $75m ($57m euros) for Colony Investors VIII. Limited partners in the fund are projected to achieve a targeted gross IRR of over 20% and a 2.2x equity multiple. The anticipated net return for investors is in excess of 16% with a 1.9x equity multiple.
Colony Capital is the real estate manager of Investors VIII. The company is hoping for a total equity raise of $4bn. The amount of leverage to be placed on the commingled fund is 75%.
Investors VIII will invest in assets worldwide and will include North America, Asia Pacific and Europe. Colony Capital figures that around 50% of the fund’s investments will be in Asia. The markets it will consider deals for in Europe are France and Germany.
Colony Capital is no stranger to investing in opportunistic real estate as it has used this strategy for the past 15 years. It has experience in investing in the four main property types and hotels. The transactions for the fund should average around $160m of equity per deal.
Ohio School Employees has approved a commitment for $39.4m for the Strategic Partners Europe III. Pension funds are a big part of the fund raising for this fund. Other investors include California State Teachers Retirement System and Teachers Retirement System for the State of Illinois.
CB Richard Ellis Investors is the manager of this commingled fund. It has a value-added investment strategy to invest in existing office, retail, residential, and industrial properties in western Europe.
Ohio School Employees has $11.2bn of total assets as at January this year. The pension fund has a targeted allocation of 10% for real estate. This did not change following the pension fund’s recently created a new asset allocation structure.
