UNITED STATES - School Employees Retirement System of Ohio is one of several pension funds in the United States showing a significant interest in placing capital into entity level real estate investments.
Ohio SERS is one of several investors looking at or about to make a commitment to the commingled to the Five Arrows Realty Securities Fund V, having now approved a commitment of $50m (€33.6m).
The fund gives investors access entity-level transactions in real estate, and it is believed investors think there is going to be some strong investment opportunities in this space over the next couple of years, as Arizona State Retirement System and Teacher Retirement System of Texas have committed $50m and $150m respectively.
Much of the activity in sector of the real estate market has been fueled over the last few years by companies adopting high amounts of leverage, in the region of 80-90% debt.
That said, the credit crunch of last summer now means a great many of these players are now out of the market and this allows for investors such as Rothschild Realty to help pension funds gain returns exposure by acting as its all-cash capital in the marketplace.
Rothschild Realty is looking at raising potentially around $620m for its commingled fund as well as carrying a co-investment option for investors who have committed at least $50m to the fund, so assets can be invested in a variety of public and private real estate companies around the United States.
Pennsylvania Public School Employees Retirement System, Ohio Public Employees Retirement System and Alaska Retirement Management Board have already committed assets and therefore have the option of co-investment.
Rothschild Realty has made one investment for Realty Securities Fund - a $110m investment with T Wall Properties.
The company owns and develops office buildings in and around the Madison, Wisconsin area but this capital will allow them to continue to invest in more and larger transactions.