NORTH AMERICA – The San Francisco City and County Employees' Retirement System has approved a $52m (€39.2m) commitment into the Gateway Real Estate Fund IV.

The investment focus will be China, Hong Kong, Macau and Taiwan.

In a board-meeting document, Lindsey Adams, senior portfolio manager of real estate, cited three key themes that would drive Chinese real estate returns for the foreseeable future.

She said an accelerating urbanisation rate was creating enormous demand for urban real estate, while China's middle class was expected to grow at an accelerating rate based on current GDP expectations.

China's new leadership is also pushing economic policies that will further emphasise more services and a consumption-based economy, she said.

Gaw Capital Advisors is the manager of Fund IV.

Due to investor demand, the manager has decided to expand the capital raise from the $700m target to its hard cap of $1bn.

Investors already in the fund include the Harvard Management Company, a $75m commitment from the New York State Teachers Retirement System and $50m from the Teachers' Retirement System of the State of Illinois.

The fund will invest in residential, retail, office and hotels.

The targeted returns are 15% net and 20% gross IRRs.

Gaw will be making a co-investment of up to $25m.

Meanwhile, Tim Walsh, director at the New Jersey Division of Investment, will be leaving the pension fund to become president and COO at Gaw Capital North America.

This will be an opportunity fund that will invest in the US, with a total equity raise of $500m.

In other news, Cabot Properties has signed an agreement to sell its industrial portfolio for Cabot Industrial Value Fund III for $1.5bn to Liberty Property Trust.

The vast majority of the assets are located in the US, with a small portion in the UK.

The deal is expected to be completed in the autumn.

Value Fund III is a 2008-vintage closed-end commingled fund that only invested in industrial buildings.

Cabot raised $680m of equity for the fund.

Investors include the Pennsylvania Public School Employees Retirement System, with a $100m commitment, and the New York State Teachers Retirement System, which invested $50m.

There is around 55% leverage placed on the fund.

Topics