REAL ESTATE - San Diego County Employees Retirement System has allocated a $25m(€19m) commitment into the Cornerstone Apartment Ventures III, LLC.
The pension fund took this action on its real estate portfolio at its board meeting earlier this month. The pension fund was advised by Matt Johnson, a principal with its real estate consultant, The Townsend Group.
The real estate manager on the commingled fund is Cornerstone Real Estate Advisers. It is expecting a second and final closing on the commingled fund on February 15. The total equity raise is projected to be at around $400m. One of the investors in the fund with a $20m commitment is the San Diego City Employees Retirement System.
Cornerstone has Mass Mutual Life Insurance Company as its parent company, which will be making at least a $25m co-investment to the commingled fund.
It is anticipated that investors in the fund will achieve a net return of 14.3%. There will be leverage on the fund. The loan-to-value ration for the commingled fund’s portfolio will be 65%.
The investment strategy for Apartment Ventures III is to invest in value-added apartment transactions. Investing equity in new development projects is one kind of deal. Another is purchasing existing assets that have the potential for improvement and redevelopment.
Some of the transactions for the fund will be creating joint ventures with selected development partners. Among the markets it will be taking a look at are New York, Seattle, Washington DC, Los Angeles and Boston.
There are a few pre-specified assets already placed into the fund. One is the development of the 430-unit Pacific Place complex in Los Angeles. The equity investment from the commingled fund is $47.4m. The leveraged IRR on the transaction is 17.4%.
Cornerstone does have a number of assets being considered for future investment located in Stamford, Conn and Alexandria, Va.