REAL ESTATE - The School Employees Retirement System of Ohio has approved up to a $50m commitment into the Retail Enhancement Fund.
The fund took this action at its board meeting in mid November.
This is a commingled fund that is managed by Madison Marquette. The real estate manager is still raising capital for the fund.
The Retail Enhancement Fund focuses on investing in retail properties. This would be buying existing assets that can improved through a re-development strategy. The kind of retail that would be acquired are community shopping centers.
Madison Marquette will look for properties all over the United States. This would typically be in major metropolitan areas. The real estate manager has a long and successful track record in turning around retail properties.
This commitment by Ohio School Employees continues its strategy of investing value-added or opportunistic real estate investment commingled funds. This was started in September when it committed up to a $50m to Carlyle Realty Partners V and up to $20m in British Pounds in the CB Richard Ellis Strategic Partners UK III.
The pension fund has this strategy as part of overall investment strategy for fiscal year 2007. The thinking here is that these kind of real estate investments can do two things for the institutional investor. One is to achieve higher returns. The funds typically deliver a high teens gross IRR. There also is the possibility of more diversification, as the investment funds acquire assets that the pension fund has limited exposure to.
Ohio School Employees figures that it wants to invest from $100m to $150m in the fiscal 2007 in opportunistic and value-added commingled funds. More commitments could be happening in the near future.