REAL ESTATE - Two pension fund clients of The Townsend Group, a leading real estate pension fund consultant in the US, will be investing up to $475m(€365m) in two commingled funds.
The investment funds involved in the commitments are Colony Investors VIII and Heitman American Real Estate Trust.
The Teacher Retirement System of Texas has approved commitments of up to $200m in the Heitman fund and up to $150m in Colony Investors VIII. These actions were taken at its board meeting mid last month.
The Pennsylvania State Employees Retirement System will be investing up to $100m in the Heitman fund and up to $25m in the Colony fund. These investments were approved at the pension fund’s board meeting in early December.
Rob Kochis is a principal with Townsend. He works on the accounts for both Texas Teachers and Pennsylvania State Employees. He said, "Colony has a proven track record in being able to source unique transactions on a global basis. Heitman has shown that it strong personnel in sourcing deals, asset management and client relations for several years for its separate account pension fund clients. This will suit them well for its commingled fund."
Colony Capital is the fund manager of Colony Investors VIII. This will be a commingled fund with a total equity raise of $4bn. Investors in the fund are projected to achieve a net return of 16%. Colony Capital will make a co-investment to the fund of around $40m.
Investors VIII will be looking for deals in three parts of the world. These are North America, Europe and the Asia Pacific region. It’s anticipated that the fund will complete 10 to 14 deals every 12 months. These transactions will have an average equity investment of $160m.
The Heitman American Real Estate Trust has been marketed as a core open-ended investment fund. Investors in the fund are projected to achieve a 7% to 9% gross IRR.
Heitman has around $140m worth of deals in the pipeline. The vast majority of deals for the commingled fund will be with the main property types of office, industrial, retail and apartments. Around 10% to 15% of the portfolio could be with value-added transactions. These could include property types like medical office buildings, self-storage and student and senior housing.