NORTH AMERICA - The Nebraska Investment Council and the Public Employees Retirement Association of New Mexico have made commitments totalling $55m (€44m) into the Rockwood Fund IX value-added fund.
Both of these investors have already held core assets within their real estate portfolios. They said they were looking to expand into the value-added space with their next investments.
Nebraska made a $20m commitment to Fund IX, while New Mexico PERA invested $35m.
Nebraska made its commitment based on the recommendation of its real estate consultant, Hewitt EnnisKnupp, which cited Rockwood Capital's track record.
Each of the firm's four fully realised commingled funds has delivered their expected returns, and two of the four unrealised funds are projected to meet their targets as well.
The projected capital raise for Fund IX is from $800m to $1.2bn, with a targeted net IIR to investors of 13-15%.
Fund IX will focus on building a portfolio of real estate investments that has both strong in-place cash flow and the potential for near-term income growth through "value -creation activities".
These would include re-leasing, repositioning, redevelopment and changing use.
Ground-up development will also be considered as a strategy.
Nebraska funded its investment in Fund IX with $5m in cash and $15m the pension fund had held in public REITs.
Nebraska decided in the autumn of 2010 to take its capital in REITs and fund new investments in private real estate.
Jeff States, the state investment officer, said: "We had established the REIT portfolio in 2004 as a way to achieve some instant diversification in real estate, and REITs were the best way to achieve this. The intent was never to stay in REITs on a long-term basis. Another factor in our decision was the volatility issue with REITs."
The REIT portfolio had reached its peak from a valuation standpoint in December 2005, when the portfolio was valued at $19m.
This portfolio was split up, with $116m managed by Goldman Sachs and $83m by Heitman.
The relationship with Goldman Sachs was terminated in December 2011.