Real Estate News
US roundup: LACERA, San Francisco Employees' Retirement System
14 Aug 2012
NORTH AMERICA - Los Angeles County Employees Retirement Association (LACERA) has approved a €50m allocation into the Europa Fund IV.
John McClelland, principal investment officer for real estate, wrote in a board meeting document that Europa Capital was a proven manager of buying and selling assets.
Since it was formed in 1995, the fund manager has completed 49 realised investments that have generated a gross-of-fee return of 20% with a 1.6x equity multiple.
McClelland wrote that the ongoing de-leveraging in the European real estate market would create buying opportunities for sponsors with access to capital such as Europa.
There is a 9% preferred return for investors contributing capital to Fund IV.
Europa will be making a co-investment of 10% of the fund's aggregate commitments up to a maximum of €50m.
This commitment will be split, with 75% being funded by Europa's majority owner Rockefeller Group International and 25% by the executive team of Europa.
Europa is seeking a total equity raise of $750m for Fund IV.
The first closing will be in September, with an anticipated capital raise of €200m.
The final closing is projected to occur 12 months after the first close.
The commingled fund may use up to 75% leverage, although historically Europa has utilised lower levels of debt with an LTV average of under 65%.
Fund IV will make investments in real estate assets and real estate operating companies in the European Union, Norway and Switzerland.
Most of the deals for the commingled fund will be in the €15m-40m range.
McClelland wrote in the pension fund document that Europa found that investments in this size range were too small for large institutional investors and too large for local investors.
In other investment news, City and County of San Francisco Employees' Retirement System has made a $50m allocation to Brookfield Strategic Real Estate Partners.
Brookfield Asset Management is the manager of the Real Estate Partners fund, which focuses on distressed transactions with a value-add orientation.
Lindsey Adams, senior portfolio manager for real estate at the pension fund, said in a board meeting document that the current market conditions and the distress driven by loan maturities would to continue to create attractive investment opportunities.
San Francisco City and County is expecting the commingled fund to have an annualised gross IRR of 18-20% and a 2x to 2.5x gross multiple.
Brookfield had an initial close for Real Estate Partners in May with commitments from third-party investors at $1.1bn.
Two of the larger investments include $310m from the New York City Office of the Comptroller and Teacher Retirement System of Texas.
The target raise for the commingled fund is $3.1bn.
Brookfield will be making a total equity co-investment to Real Estate Partners of $1bn.
It will be looking at a variety of investment strategies for the fund, including positions of control in direct properties, real estate companies and distressed loans and securities.
The primary markets will be North America and Europe.
Author: Jon Peterson