REAL ESTATE - The Oregon Public Employees Retirement Fund(OPERF)has made its first investment in its opportunistic portfolio that was created in 2005.
The initial investment in this asset area was a $100m (€76.3m) commitment to the Fidelity Real Estate Opportunistic Income Fund LP.
The pension fund created the opportunistic area as a way to place investments that might fall outside of the typical investments for real estate, fixed income or private equity. Infrastructure is an another example of investment that might fit in this area.
Brad Child , senior real estate investment officer for OPERF, said: "It’s our opinion that there are some good investment opportunities in the market that might not directly fit in those asset classes. This is a way for us to participate in those investments."
OPERF has set aside 3% of its $60bn in total assets for the opportunistic portfolio. This equates to there being $1.8bn of capital available for this strategy.
The real estate manager for Fidelity Real Estate Opportunistic Income Fund is Pyramis Global Advisors. The company made a presentation about the fund for Oregon at a recent pension fund’s board meeting, where the commitment was approved.
The commingled fund is structured as an open-ended fund. The initial round of fund raising will be finished at the end of this month. OPERF is the lead investor for this. The total amount raised will be around $200m.
Pryamis hopes to have the commingled fund reach $1bn over the next few years. There will be a $25m co-investment made by the manager.
The aim is that investors will achieve a gross annualised return of 10 to 14%. This return has factored in a three- to four-year holding period.
Pyramis will be looking at a variety of transactions for the fund. These will include CMBS, mezzanine, B notes and common stock of public REITs. Transactions will mostly involve US assets, as no more than 20% of the portfolio can be invested in assets externally. There will be 50% leverage placed on the commingled fund.
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