UNITED STATES - Oregon Public Employees Retirement Fund has created a new structured finance separate account with Guggenheim Structured Real Estate Advisors worth $900m (€621m).
Brad Child, senior investment officer for real estate at the pension fund, said structured finance is being considered as part of its core real estate holding, having allocated $300m.
"We looked at our separate account area of our real estate portfolio and felt the structure finance was an area where we didn't have any capital yet. We do think there are some strong investment possibilities, given what has been happening in the debt markets the past several months."
Child continued: "We are doing this for two reasons. One is the amount of leverage, which will be around 67%. The other is that most of the transactions will be in the second position in the capital strategy. In our minds, this makes it a fairly safe investment strategy."
Total capitalization on the separate account will be around $900m and managed by Guggenheim on a discretionary basis, so any investment decisions falling outside of its investment guidelines will need to seek the pension fund's approval.
Investment strategy for the account will be to place capital into a variety of structured finance deals, including whole loans, B-notes, mezzanine debt and CMBS transactions within the US.
Transactions for the separate account are expected to deliver a leveraged IRR return of 8-9% .
Oregon PERF is funding this separate account with new capital, having decided in August to increase its targeted real estate allocation from 8% to 11% - giving the fund an extra $1.8bn of capital to invest in the asset class.
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