UNITED STATES - Wisconsin State Investment Board is planning to invest into hotels for the first time.
The pension fund is in the process of making a $150m (€96.8m) commitment into the Cornerstone Hotel Income & Equity commingled fund though the actual commitment will be approved later this year.
Wisconsin State officials particularly like the method of investing behind this fund, as the commitment will fund acquisitions over several years and declining performance in the current economy could reduce the acquisition prices of existing hotels for several years to come.
Cornerstone Real Estate Advisers has now raised $450m of equity for the fund, having secured several major investors, including a $150m commitment from Los Angeles County Employees Retirement Association (LACERA) earlier this spring.
Cornerstone is hoping to raise as much as $600m through the fund while investors are projected to achieve net IRRs of 15-18%.
Its investment strategy is to invest in upscale hotels around the United States, in regions such as California ,and along the Boston to Washington DC corridor on the East Coast.
There are no assets in the fund yet as acquisitions will not begin until the fund raising is completed later this year.
That said there is a pending $75m allocation into the Lowe Structured Investment Fund - a new area of exposure for Wisconsin State as they have never placed capital in debt funds before
Lowe Enterprise Investors' investment strategy will include making investments in subordinated loans such mezzanine and B-notes debt.