UNITED STATES - Pennsylvania Public School Employees Retirement System has agreed to invest 25% of the committed capital into the Carlyle Europe Real Estate Partners III commingled fund, as long as the total is no more than €200m.
Working in consultation with Courtland Partners, the pension fund took its action at its June 21 board meeting as it believes there are good investment opportunities to be had in Europe.
Pennsylvania believes this region will continue to have a favorable investment climate for several years because of an increase in real estate dispositions by corporate and public sectors, an improving real estate market cycle and the strong performance by the European real estate capital market.
The Carlyle Group has been an active player in Europe since 2001, led by European managing director Eric Sasson so is looking to raise €1.5bn through the Europe Real Estate Partners III opportunity fund.
The pension fund believes its commitment should help the manager source transactions as it now has long-term relationships with local developers, corporate real estate owners, institutional investors and private individuals.
The fund has a projected leverage IRRs for investors of 20% to invest in existing assets. Monies will targeted at properties with a poor physical appearance, those associated with planning permission complications, the leasing risk of an empty building, and properties with leases that are up for renewal and potential vacancy.
Commingled assets will be focused on several markets, including France, Germany, Italy, Scandinavia, Spain, Portugal and the United Kingdom and across several property types.
Pennsylvania Public School also approved three other real estate commitments at its June board meeting - $200m to the Centerline High Yield CMBS Fund III, $250m to the DLJ Real Estate Capital Partners IV and $400m to the Stockbridge Real Estate Fund III.