Washington State to invest $250m with Fillmore

REAL ESTATE - The Washington State Investment Board has decided to invest $250m with Fillmore Capital Partners through its Fillmore Strategic Partners entity.

This is the second time that the pension fund has invested in Fillmore Strategic Partners. In the fall of 2005, Washington State invested $350m in the same entity. All of that commitment has already been invested.

Ron Silva is president and founder of Fillmore Capital Partners. He said, "We look forward to continuing our relationship with the State of Washington and being able to find the right transactions in a tough market."

Washington State is the only investor in Fillmore Capital Partners. The investment strategy for the fund is to invest in real estate through structured finance transactions. These could be mezzanine debt, preferred equity and equity deals.

Fillmore Capital is looking for deals that can produce a leverage IRR in the mid teens. This yield assumes a three- to seven-year holding period.

The real estate manager will mostly be looking at health care transactions for the new capital from Washington State. These would include assets like senior housing, assisted and independent living. Some deals could involve companies that own hospitals or out patient clinics. There will also be some investments with hospitality assets.

Fillmore Capital will be looking for transactions that involve assets all over the United States. The deals could be with single assets or portfolios. The real estate manager will consider investing in a recapitalization of a health care or hospitality company.

The deals for Fillmore Capital Partners are similar to the transactions the Fillmore is doing for its commingled fund, Fillmore East Fund. So far it has invested around 62% of the capital for the fund.

The total equity raise for the fund was $400m. Washington State was an investor in the fund. Other major investors included Pennsylvania State Employees Retirement System, California Public Employees Retirement System and PSP Investments, the federal pension fund of Canada.