UNITED STATES - Oregon Public Employees Retirement Fund has agreed to invest $150m (€102.6m) into commingled funds focused on Asia and urban strategies.
The pension fund has made a $100m commitment to the Alpha Asia Macro Trends Fund and a $50m allocation to the Canyon Johnson Urban Fund III.
Both of these investments were discussed and approved at the pension fund's board meeting on December 5, following advice real estate consultant Pension Consulting Alliance.
The Alpha Asia Trends Fund will be the pension fund's first commingled fund dedicated to investing only in Asia, said Brad Child, Oregon's senior investment officer for real estate.
"We think that there are many Asian markets with strong investment opportunities and we like that there will be country diversification within this fund," said Child.
The commingled fund will have at least 80% of its assets in developed countries in Asia, such as Japan, Hong Kong and Singapore, while up to 20% of the fund will be in real estate assets in emerging markets such as China, India and Vietnam.
Oregon PERF is projected to achieve net IRR of 14-16% over 7-10 -year holding period by investing in a mixture of existing and development projects which include retail, apartment and office buildings.
This new fund strategy is managed by Singapore-based Alpha Asia, having raised total equity of $1.5bn.
At the same time, Oregon PERF has made its first move into urban real estate with a commitment to Canyon Urban Fund III.
"It's our opinion that an urban investment strategy still makes sense. There are many cities around the United States that are creating investment possibilities in their urban areas," continued Child.
The pension fund anticipates investors in the commingled fund will see 18% IRR, net of fees.
Oregon will be one of the last investors into the commingled fund, as Canyon Capital Realty Advisors is planned to raise $750m in equity, the assets of which will then be invested in new retail and mixed-use development or improvement projects.
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