NORTH AMERICA – The Oregon Public Employees Retirement Fund (Oregon PERS) has approved a $100m (€72.9m) investment into the Rockpoint Core Plus Real Estate Fund.
It is the first fund launched by Rockpoint to target core-plus and value-added investments; its predecessors have employed opportunistic strategies.
Tony Breault, senior investment officer for real estate at Oregon PERS, said: “Because the market has changed in recent years, the kinds of deals Rockpoint has been working on will not be all that different from the kinds of deals it will be pursuing for the Core Plus fund.”
Rockpoint is looking at a total capital raise for the fund of $1bn.
The commingled fund will be limited to a subset of existing Rockpoint institutional investors.
The expectation is that there might be a total of six investors in the fund, with two covering 75% of the total capital raise.
Some of the minor terms of the fund have yet to be worked out, including an allowance to invest in properties outside of the US.
“What we are talking here is to allow the commingled fund to invest in some properties in Europe,” said Breault.
The targeted returns for the Core Plus Fund is a 9-10% net IRR.
The transactions are expected to generate a significant component of returns from current cash flows and modest appreciation through moderated capital expenditures, more effective leasing efforts or operational improvements to increase asset level net operating income.
The major focus of the Core Plus Fund will be to buy office and multifamily assets in the US.
Most of the activity will be along the East and West Coasts.
It will not be doing any new development, and the leverage on the fund is set at 50% on a loan-to-value ratio.
In other news, New Mexico State Investment Council has approved a $100m commitment to the MetLife Core Property Fund.
The sovereign wealth fund had been joined in the commingled fund by other recent commitments of $50m by the Alameda County Employees Retirement Association and $150m by the Louisiana Teachers Retirement System.
Vince Smith, deputy state investment officer at New Mexico, said: “This commitment allows us to invest right away in a good-quality, seeded real estate portfolio and will get us closer to our target of 50% of our real estate portfolio being in core assets.”
MetLife has seeded the Core Property Fund with 23 properties from its general account.
These properties have a gross asset value of $1bn.
They are a mixture of office, industrial and apartment assets in the US.
MetLife will be making a co-investment of at least 20% of the initial equity for the fund.
The Core Property Fund is a core, open-ended fund.
The return objective is to outperform the NFI-ODCE Index over a full market cycle.