UNITED STATES - Pennsylvania State Employees Retirement System and the Teacher Retirement System of Texas are two of the latest US pension funds to place capital into opportunity funds.
Pennsylvania State is investing $50m (€34.3m) into the Westbrook fund VIII while Texas Teachers has approved a $100m investment into Iron Point Real Estate Partners I part because they believe there will be many strong non-traditional investment opportunities available this year and want to take advantage because this kind of real estate was greatly affected by the changes in the debt markets.
The wider range of ‘non-traditional' real estate has, in recent years, tended to be acquired by highly leveraged buyers but these investors have been pushed out of the market now many sources of debt no longer around.
Westbrook Partners has just kicked off its money raising campaign for Westbrook fund VIII to generate a total capital raising of $2.5bn in return for 20% gross or 16% net IRR, so Pennsylvania State is one of the first investors in the fund.
The firm itself will be making a $25m co-investment to the commingled fund and its investment strategy is to make non-traditional real estate investments in major global gateway cities around the world, including London, New York, Paris and Los Angeles.
Iron Point Real Estate Partners is a $500m fund, setup by the named firm as an offshoot of the Robert Bass family, based in Texas.
The Bass family is expected to invest $100m of its own capital into the fund for projected investor return of 18% net IRR, and will then use the fund's assets to buy specialist property types around the US, such as industrial buildings leased to beverage distributors.