NORTH AMERICA - San Diego City Employees' Retirement System has bought its first-ever apartment in the New York City metropolitan area on a direct basis.
The pension fund paid $30.6m (€23.9m) for the 208-unit New Chalet Apartments in Mohegan Lake, New York.
The property was closed on an-all cash basis.
After the deal was concluded, the property was encumbered with 50% loan-to-value debt.
Johnny Tran, associate general counsel for the pension fund, said the property was purchased at a discount to replacement cost in a market with high barriers to entry and limited new supply.
Limited competition, high single-family home pricing and historically high multifamily retention rates combined to create upward pressure on rental rates, he added.
He said these factors would help support San Diego City Employees' goal of ownership of stable income-producing in assets.
The pension fund views the property as a core asset and said it saw the potential to increase rents and enhance returns through a cosmetic upgrade to the unit interiors.
New Chalet was built in three phases from 1989 to 1999. Its occupancy stood at 97% when the deal was completed.
San Diego City acquired the complex for its separate account relationship with INVESCO Real Estate.
This portfolio managed by INVESCO was valued at $117m, as of 30 June.
The real estate manager has an additional $67.5m of capital available to invest going forward that will be moved into a geographically diversified portfolio of office, industrial, retail and apartments.
In other investment news, Santa Barbara County Employees Retirement System has made $20m worth of new real estate commitments during the second quarter.
Two of the commitments were made to commingled funds.
There was $7.5m each allocated to Walton Street Fund VII and Miller Global Fund VII.
The Walton Street fund is an opportunity fund that will invest in real estate-related assets and real estate operating companies, primarily based in the US.
Miller Global will have a value-added strategy for its Fund VII.
It will only be investing in the US, focusing on placing capital into office buildings and hotels it can improve over time.
Santa Barbara County moved $5m into an existing REIT separate account portfolio managed by Harrison Street Securities.
The pension fund has now allocated a total of $15m for the account.
The portfolio is made up of REITS, with 98% in the US and 2% in Canada.