UNITED STATES - Pension funds in the United States are going to be taking a closer look at placing some capital into apartments as officials believe there will be stronger renter demand for apartments in the near-term.

One such investor is Wisconsin State Investment Board which has backed Henderson Global Investors in their $205m (€138.9m) equity raise for its CASA IV commingled fund with a $50m investment in the commingled fund on behalf of its pension fund.

It is thought people in the US are no longer looking to buy single-family homes and would prefer to rent an apartment, as is beginning to be seen in external markets elsewhere.

Total capitalization in the commingled fund will be $585m once maximum of 65% leverage is applied, and investors should see a projected return of 12-14% leveraged IRR over a five-year holding period.

Henderson has not seen a change from any of the lenders it deals with for financing its investments over the last several months.

The real estate manager uses tax-exempt bonds to finance all of its projects, which is issued by local governments to provide below-market financing for the projects.

In return, developers agree to set aside a certain number of units for renters with income below a ceiling of the median income for the area.

Henderson currently has five properties in CASA IV - representing 32% of the fund's total capital - spread across the US in Minneapolis, Kansas City, Chicago, Los Angeles and Columbia.

It is anticipated the fund will be fully invested by the first quarter of 2009.


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