REAL ESTATE- The Washington State Investment Board has approved four real estate investments totaling $1.29bn of new capital. The pension fund made these decisions at its board meeting on November 16.
All of the commitments were made with managers that the pension fund had done business with in the past. Two of the managers were with structured finance funds. One of these was with Fillmore Strategic Investors, LLC. The new commitment was for $250m. The pension fund had committed $350m to this entity in the fall of 2005.
The other structured finance investment was Washington Holdings Structured Finance, LLC. The new investment was for $350m. The pension fund had invested $250m last year.
Washington Holdings will be looking at a variety of mortgage transactions. These will include first mortgages and mezzanine loans. The favored property types are office, industrial, apartments, hotels and land. Most of the deals will be in the western region of the United States. Transactions are typically $10m and up.
Washington State made a new $250m commitment to Corporate Properties of the Americas, LLC. This is the third time the pension fund has invested with this manager. It had allocated $250m in 2002 and $500m in the fall of 2005.
Corporate Properties of the Americas has an international real estate strategy. It acquires and develops industrial properties in Mexico. This is typically warehouse-distribution kind of industrial product of around 100,000 s.f.
The final commitment was a $440m investment with Morgan Stanley Real Estate Fund VI International. Washington State has invested with the manager in its previous investment funds dating back to 1998.
Real Estate Fund VI International is an opportunity fund. Markets that it will be active in include India, Mexico, Brazil and Russia. It will be targeting deals in both residential and commercial property types. Some of the transactions will be making investments in real estate operating companies.
Washington State believes that these commitments will give it an opportunity to achieve higher returns and more diversity within its real estate portfolio. Its real estate portfolio has a current market value of $5.8bn. It has invested 10.48% of its total assets in real estate through September 30. The targeted allocation for real estate is 9.5%. The retirement fund at Washington State has total assets of $55.7bn.