UNITED STATES - Teacher Retirement System of Texas has approved $250m (€164.4m) worth of real estate commitments so far in 2008, including an investment in Pramerica's Latin American residential offering.
$150m has been placed in the PLA Residential Fund III along with $100m into Iron Point Real Estate Partners as both of these commingled funds are considered value-added investment strategies and this is considered to be a sound strategy now, until the pricing on core real estate becomes a little more settled.
Pramerica's Residential Fund III now has $1.5bn in assets to generate high return investments in residential real estate in Mexico and other select countries in Latin America and is projected to produce gross IRRs in local currency of 25-35%, or gross IRR of 18-23% and a net IRR of 15-20% in the US equivalent.
The PLA fund is attempting to capitalise on the attractive demographic trends and strong economic drivers expected to fuel continued growth and development of the residential markets, particularly within the expansion of the mortgage market in Mexico. This will help promote future home ownership in a country where more than 700,000 households are being created annually and only 12.6% of the housing stock is leveraged.
Residential Fund III will invest at least 80% of the capital in Mexico to develop ‘for sale' homes, apartments for rent and finished residential lots.
In contrast, however, Iron Point Real Estate is a $500m commingled fund investing in the US only but looks at specialist property types, such as industrial buildings fully leased to beverage distributorships.
The real estate manager on the commingled fund is Iron Point Real Estate Partners -a company created as a spin-off from the Bass Family to deliver is an 18% net IRR.