UNITED STATES - Pennsylvania Public School Employees Retirement System has approved new real estate commitments totaling $461.5m (€293.5m) in the opportunistic sector.
A €200m commitment has been made to the €3bn Blackstone Real Estate Partners Europe III fund, as Pennsylvania Public School believes it has the expertise to understand complex financial operational situations which should provide a distinct advantage over other competitors when seeking out deals for the commingled fund, alongside Blackstone's array of relationships with financial institutions, corporate executives, government officials and local operating partners, which in turn should lead to strong deal flow.
The pension fund thinks there are some strong investment opportunities in Europe, particularly in distressed debt and equity investments in "under-managed" operational assets and those controlled by non-core owners, such as large corporations and government bodies.
Blackstone is expected to be active in the UK and continental European hotel, healthcare and student housing sectors, while property acquisitions and investments in operating companies are being considered for the commingled fund.
The remaining commitment approved by the pension fund was for up to $150m into the Lubert-Adler Real Estate Fund VI as Pennsylvania Public School believes there are going to be many good investment opportunities in the United States, given the current volatility in the capital markets.
Real Estate Fund VI is a opportunity fund investing mostly in the United States, and it has strict rules stating the amount invested cannot exceed 25% of the total committed capital for the commingled fund while no more than 10% of the capital can be placed in real estate outside of North America.
Lubert-Adler will be making investments in the four main property types and hotels and some entity level commitments across the US, one such example being a $200m investment made with Pacific Retail Capital Partners to mostly invest in the renovation of ‘B class' regional malls.
The commingled fund will have a total equity raise of $2.5bn and Lubert-Adler will make a co-investment to Real Estate Fund VI of at least $50m.