GLOBAL - The Texas Permanent School Fund has approved its first ever non-US real estate commitment with a €40m commitment into the NIAM Nordic V. L.P.

The institutional investor, advised by real estate consultant Courtland Partners, took action on the commitment at its 18 April board meeting.

According to a document provided for the board meeting, Courtland believes the commingled fund will provide several benefits for investors. 

It said there was an opportunity for "outsized returns" relative to core that Texas already had, and that the potential return for investors was a 16% net levered IRR.

Courtland also cited preservation of capital. Each of NIAM's prior investment vehicles have generated significant positive returns at the fund level, and the fund manager has not lost investor equity on a single realised transaction in Funds I-IV.

NIAM is targeting a €600m capital raise, with a maximum of €800m. 

Through the end of 2011, it had capital commitments of approximately €412m. The final closing date for the fund is 9 May. 

The fund manager is expecting the leverage placed on the commingled fund will range from 65% to 70%.

NIAM will be contributing 1% of the total commitments to the fund.  This will come from capital provided by Stronghold, NIAM's parent company, NIAM as a company and certain NIAM professionals.

Nordic V is being marketed as an opportunity fund considering a variety of investment strategies. 

These include office to office or office to residential redevelopments in prime locations and off-market deals from major capital-constrained lenders that own financially distressed portfolios that will be sold with a new financing package.

The majority of the deals for the fund are likely to be located in Sweden and involve office and retail assets. 

The fund will also consider deals in Norway, Finland and Denmark and include a mixture of commercial and residential properties.

NIAM is a very experienced player in these markets.  Since its inception, the manager has invested more than €5bn in the markets specifically targeted for Fund V.

The manager has raised capital from a variety of public and corporate pension funds in the US, including CalPERS, CalSTRS, General Electric and Nestle.

Topics