UNITED STATES - Oregon Public Employees Retirement Fund has approved a $100m (€78.6m) commitment into the Guggenheim Fund II(a),which follows a fund launched in 2006.
Pension fund officials at Oregon PERF are aware the returns on Fund II have dropped by 50% over the past 12 months but the fund is still said to believe in the firm Guggenheim Structured Real Estate Advisors and the investment team's long-term strategy.
"We realise that the current investment climate has made it difficult for Guggengeim," said Don Pierce, investment officer at the pension fund.
"We still believe in them and their real estate strategy for the future."
Guggenheim is trying to raise a total of $300m of equity for Fund II(a), which has been created to increase the equity component of Fund II and lower the debt ratio.
More importantly, other pension funds are joining Oregon PERF and injecting assets into Fund II(a) as San Bernardino County Employees Retirement Association had made a $40m allocation to Fund II and is thought to be considering a similar commitment this time around.
Investors in Fund II were originally expected to achieve a net IRR of around 15% but by the end of September, San Bernardino County had receeived net IRR of 6.73% on Fund II.
New Jersey Division of Investment also made an earlier $50m allocation to Fund II and is said to be considering a commitment to Fund II(a).
That said, not all of the original investors for Fund II will be investing capital this time as California Public Employees Retirement System (CalPERS) has decided not to extend beyond its $100m allocation to the original fund.
CalPERS has seen its return on this fund drop significantly over the past 18 months as the one-year return on the fund was 14.7% at March 2007 but the projected realised net return since inception of the fund is now 5.7%.