UNITED STATES - Oregon Public Employees Retirement Fund is to boost its real estate debt investment exposure through its separate account with Talmage.
The pension fund has approved an extra $125m (€95.9m) for the $300m separate account established in 2008.
Oregon PERF believes the Talmage, formerly Guggenheim Structured Real Estate Advisors (GSREA), is well positioned to capitalise on attractive debt markets in the short and medium term and achieve accretive returns.
Oregon PERF had funded other investments with Talmage: $50m in the Guggenheim Structured Real Estate Debt Fund I, and $100m and $150m, respectively, in two follow-on funds.
The investment strategy of the separate account has not changed since inception, focusing on a variety of real estate-related debt instruments, including whole loans, mezzanine loans, CMBS and CDOs.
By holding the debt investments to maturity, the strategy aims to produce total returns of 12.1% and a 1.7 net equity multiple over the next four years.
If all current holdings were liquidated, the net internal rate of return would be 11.5% with a 1.4 net equity multiple, according to pension fund documents.
Oregon PERF has placed the separate account with Talmage within its core real estate portfolio.
Figures for March 2012 show that the pension fund had invested 26.5% of its real estate assets in the core sector. Its real estate investment policy calls for core to make up 30% of the total real estate portfolio.
Oregon PERF has a targeted allocation of real estate of 11% and is currently just above this level at 11.5%.
