NORTH AMERICA – The State of Wisconsin Investment Board (SWIB) has $260m (€200m) worth of new real estate commitments in its investment pipeline.
The capital will be split into two potential real estate investments.
One is a $110m commitment into a to-be-developed office building in a central business district locations in a major market in the US.
SWIB has structured the investment to be a preferred equity position in the project.
The pension fund considers this potential capital to be placed in the value-added sector of its real estate portfolio.
The other possible investment is a $150m allocation into a closed-end commingled fund that buys office buildings in major markets in the US.
This would be a core deal for the pension fund.
SWIB now has a real estate portfolio valued at $5.5bn, as of the end of March.
This covers 6.8% of total plan assets.
The targeted allocation for real estate is 7%.
In investment news, the Ohio Public Employees Retirement System (Ohio PERS) has approved a $125m allocation to Emmes Asset Management Company for an existing separate account relationship.
This is the third time the pension fund has allocated capital to the manager, the most recent being a $150m allocation in June 2011.
Ohio PERS declined to comment on the strategy for the account.
The previous capital had an investment focus of placing capital in the distressed debt market and included a variety of debt strategies.
The return targets were IRRs in the low to mid-teens range.
The pension fund has also instructed its open-ended fund managers to re-invest quarterly income distributions from its commingled funds.
Ohio PERS currently has five open-ended commingled fund managers.
Lastly, the San Diego City Employees Retirement System is discussing a 2-3% allocation of total plan assets to be invested in opportunistic real estate.
Pending approval at its 27 June board meeting, this would free up $120m-175m of capital for this strategy.
San Diego City is looking to invest the new capital through commingled funds.
Hewitt EnnisKnupp provided the pension fund with an example of a typical term sheet for a commingled fund.
The target return would be a 17-20% gross IRR and a 9% preferred return for any limited partners.
The target capital raise would be $1.3bn of equity with a maximum leverage of 65%.
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