InsightsKAP’s insights on private equity investor relations and fundraising
Welcome back to the weekly Re-KAP where we round up market and LP news from the RE PE marketplace (Dec. 06, 2017)
NYC-based GTIS Partners and the $215.3 billion California State Teachers’ Retirement System (CalSTRs) have entered into a joint venture agreement to initially invest $204 million in homebuilding and residential lot development, nationwide.
CAPITAL RAISING UPDATES
- The Wall Street Journal recently reported on the final closing of CBRE and LaSalle’s latest funds. Together, the two funds amassed nearly $2.5 billion. CBRE’s eighth value-added fund will focus primarily on the U.S. while LaSalle’s third debt fund is targeting Western Europe. Despite the successful outcome, CBRE fell short of its fundraising goal by about $160 million.
- IREI recently published its Opportunistic Funds Investment Guide. As of November 30, they list 23 funds seeking more than $7 billion of capital commitments. Approximately half of these funds are expected to close by Q2 2018.
David Rose re-joins Walton Street as a Principal. In his newly created role within Walton Street’s Investor & Marketing Services Group, he will be responsible for marketing and providing resources and services to real estate consultant and advisory firms. Previously, Rose was a partner in the real estate practice at Aon Hewitt, where he was the lead consultant for several key clients, managed the due diligence process for new products and was a senior researcher for the real estate sector.
In creating a new marketing role, Walton Street joins many industry peers. At the beginning of 2017, Institutional Investor reported a significant increase in Investor Relations hires at real estate and private equity firms.
LIMITED PARTNER NEWS
- Kansas Public Employees Retirement System (KPERS) committed $60 million to LaSalle Property Fund, an open-ended core real estate fund. The $18 billion public pension previously committed $100 million to the fund in 2010. Townsend recently reviewed KPERS’ investment strategy and proposed a real estate pacing plan to help them achieve their 11% target in 2018.
- Houston Firefighters Relief and Retirement Fund has committed up to $20 million to each of Sterling Value Add Partners III and Torchlight Debt Opportunity Fund VI. The $4.1 billion public pension fund has a current allocation of 4.8% to real estate, below their 7% target.
- New Mexico State Investment Council (NMSIC) committed $75 million to KKR Real Estate Partners Americas II, which will invest in North America. In August, the $22 billion sovereign wealth fund changed its real estate target allocation from 10% to 12% and currently falls short of this goal with an actual allocation of 9.2%.
- Teacher’s Retirement System of Louisiana (TRSL) committed $100 million to two real estate funds. The $18.7 billion public pension committed $50 million to each of Sterling Value Add Partners III and Harbert European Real Estate Fund V. Sterling is a value-added fund focused on the retail sector. Harbert is a value-added/opportunistic fund that invests in office, retail/mixed use and residential properties. TRSL has a current real estate allocation of 8%, slightly below their 9% target.
- Illinois Municipal Retirement Fund (IMRF) approved commitments totaling up to $400 million to real estate managers. The $39.8 billion pension fund committed: a) up to $100 million to Ares European Real Estate Fund V, which invests in European residential, retail, office and industrial real estate; b) $150 million to the Heitman America Real Estate Trust, which targets apartment, industrial, office, retail, and self-storage properties; c) $150 million to JPMCB Strategic Property Fund, a commingled fund managed by J.P. Morgan Asset Management that invests in high-income retail, residential, office and industrial real estate; d) up to $100 million to Buckhead Properties, a core industrial fund managed by TA Associates Realty; and e) up to $50 million to the Barings European Core Property Fund. As of September 30, IMRF has an actual allocation of 5% to real estate, trailing its 8% target.
- Los Angeles Fire and Police Pension (LAFPP) hired AEW Capital Management to run a $322 million real estate separately managed account, according to a staff report. AEW replaces Sentinel Trust Co, whose contract was set to expire Dec. 31, 2018. The search began in March and included final proposals from CBRE, Heitman, L&B, Sentinel and Stockbridge. Separately, the board hired Cohen & Steers Capital Management to run half of a $345 million domestic real estate investment trusts portfolio now managed by the incumbent Principal Real Estate Investors. Principal will continue to manage the other half of the mandate, which has been split to diversify risk. The $21.9 billion pension fund board maintains a 10% target allocation to real estate.
- University of Michigan Board of Regents committed $40 million to CREA Partners II, a real estate fund focused on residential or mixed-used properties in the southern United States. The $9.7 billion endowment currently allocates 9.4% of total assets to real estate.
- New Mexico Educational Retirement Board’s (NMERB) total real estate portfolio performance ranks #1 for past 10 years, according to the pension fund’s Investment Performance Analysis report for the period ended June 30, 2017. The ranking consists of U.S. public pension plans with more than $1 billion in assets. In August, the public pension approved changes to their real estate investment policy, including increasing their target exposure from 5% to 7% and eliminating “residential” as a property type category to create two distinct descriptors of “multifamily” and “senior housing.”