NORTH AMERICA – The Los Angeles County Employees Retirement Association (LACERA) has approved a €100m commitment into the Prologis Targeted Europe Logistics Fund.
John McClelland, principal investment officer for real estate at LACERA, said the pension fund believes this is a particularly opportune time to enter the industrial sector.
He said the current economic fundamentals in Europe suggested the logistics sector was at the bottom of a cyclical market downturn and poised to recover.
LACERA’s commitment will represent 40% of the €250m Prologis is looking to raise over the next six months for the Europe Logistics Fund.
The capital from the pension fund makes it the single largest independent investor in the fund.
Europe Logistics is a core, open-ended fund, in which Prologis currently holds a 38% ownership position.
The targeted gross leveraged returns are 9-11% across market cycles.
The new capital raise for the fund will be used to pay down the existing debt on the current portfolio and acquire a pre-specified portfolio for €179m.
The properties to be purchased are from the current Prologis balance sheet.
Around 95% of the assets in the Europe Logistics Fund are located in or close to the airports or sea container ports of Paris, London, Amsterdam, Frankfurt, Hamburg and Rotterdam.
LACERA’s commitment has increased its international real estate exposure from 6.3% to 9.2%.
This puts its international real estate portfolio well within its target range of 0-20% of its total real estate portfolio.
In other news, the Teachers’ Retirement System of the State of Illinois has approved a $100m (€72.3m) commitment to the Blackstone Real Estate Partners Asia commingled fund.
Blackstone is looking at a total equity raise of $3.5bn for the fund, which will be targeting returns of 20% gross IRR and a 2x gross multiple of invested equity.
The Asia fund is an opportunity fund that will seek to capitalise on the dislocation and distress in the developed markets of Japan and Australia and emerging countries of China and India.
Illinois Teachers has made two previous investments in real estate with Blackstone – $50m in Blackstone Real Estate Partners VI in 2007 and $200m in Blackstone Real Estate Partners VII in 2011.
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