SWIB gives Heitman $165m to invest in luxury hotel debt

State of Wisconsin Investment Board (SWIB) is shifting the focus of its real estate debt investments to the hotel market.

The US pension fund has given Heitman $165m (€154m) to invest purely in hotel financing in the US.

Heitman has managed real estate debt investments on behalf of SWIB in the past – totalling $490m – but the new separate account is the first to focus on a specific sector.

SWIB told IPE Real Estate that it “likes to invest real estate debt in hotel properties now as there is less competition for transactions currently”.

Hetman, which declined to comment, will focus on the development of luxury hotels.

SWIB said it was targeting returns in the mid-teens and has placed it into the value-add section of its real estate portfolio.

The pension fund is considering three real estate commitments, according to the board meeting document.

The largest is a $159m separate account focused on US medical office buildings with a value-added strategy.

It is also considering a $100m core real estate separate account and a $75m commitment to a close-ended fund focused on US industrial properties.