US roundup: Mass PRIM, Oklahoma Teachers

NORTH AMERICA – The Massachusetts Pension Reserves Investment Management Board (Mass PRIM) has added around $200m (€148m) to its real estate portfolio.

One of these new investments was a $100m allocation to the DivcoWest Fund IV, a non-core commingled fund.

The fund focuses on target markets with tenants in technology-based industries set to benefit from growth in the tech sector over the next few years.

Tim Schlitzer, senior investment officer for real estate and timber at Mass PRIM, said: “DivcoWest has proven to be a strong manager in sourcing deals for their funds, and we have been pleased with their investment performance on the previous fund.”

Mass PRIM started its relationship with DivcoWest in 2011, making a $50m commitment at that time into DivcoWest Fund III.

DivcoWest Real Estate Services is looking at a $750m total equity raise for Fund IV, which could be concluded at the end of this year. 

The targeted return for the fund is a gross IRR on invested capital of 14-18%.

DivcoWest looks to concentrate its investment activities in high-growth markets serving the technology sector in the US, including San Francisco, Southern California and the metropolitan areas of New York, Boston and Washington DC.

The fund will buy office and R&D properties that are either unique in quality or at discounts to replacement cost. 

The value of these properties will be enhanced by repositioning, re-tenanting, capital improvement and development.

In other news, the Oklahoma Teachers Retirement System is planning to invest an additional $283m into real estate.

The new capital will be split into two investment areas. 

One part of this will be to bring the pension fund’s existing core open-ended fund managers up to allocations of $200m each.

This will mean AEW Capital Management will be allocated an additional $18m, Heitman $8m and L&B Real Estate $29m.

Oklahoma Teachers will also issue RFPs for two new investment strategies – real estate debt funds and non-core commingled funds. 

On both of these strategies, the pension fund is looking to achieve annualised returns in the range of 10% to 20%.

The pension fund will be planning the RFPs along with its investment consultant, Gregory W Group. 

The non-core searches could involve hiring an existing manager or creating a relationship with a new manager.