Oregon Public Employees Retirement Fund has made its first move into a dedicated specialist property fund with a $150m (€122m) commitment to the Harrison Street’s Partners V fund.
Partners V, which has a hard-cap of $850m, is investing US medical office buildings, senior and student housing and self-storage.
Anthony Breault, senior real estate investment officer for the Oregon State Treasury, which makes investment recommendations for Oregon PERF, said the only previous exposure the fund has had to specialty property types was through opportunity funds such as those managed by The Fortress Group.
“With the size of our pension fund, we like to establish long-term relationships with managers and we are hopeful this will be the case with Harrison Street,” said Breault.
Harrison Street, he said, had a ”strong and proven record” investing in property types which “typically don’t attract a great deal of institutional capital”.
“For Oregon, because of its size, we really can’t invest in a fund that is seeking a $500m capital raise,” Breault added. ”Our commitments are typically between $100m and $150m.
”We need to invest in a fund that is around $750m like Harrison Street.”
The Partners V fund, which has projected 16% net and 21% gross IRRs, will buy existing properties and be leveraged at around 65%.
Harrison Street, which declined to comment, will co-invest a minimum $17m.
The commitment from Oregon follows a $45m allocation to Partners V from the Public Employees Retirement Association of New Mexico.