Real Estate News
US roundup: Tennessee Consolidated Retirement System, Clarion
19 Oct 2012
NORTH AMERICA - The Tennessee Consolidated Retirement System has approved a commitment of $30m (€22.9m) into the Parmenter Realty Fund IV commingled fund.
With the news, Tennessee becomes one of the last investors to go into the fund, which was closed recently.
Andrew Weiss, managing principal at Parmenter Realty Partners, wrote in an email that Fund IV was capitalised with equity commitments of just over $300m, not including around $47m of co-investment and joint venture capital.
The fund has a value-added investment strategy, acquiring distressed office buildings located in the southern half of the US.
Leverage on the fund will be in the range of 65-70%.
Parmenter has already begun the investment process for Realty Fund IV, completing six deals.
The new commitment by Tennessee is part of the up to $460m the pension fund could be investing in a non-core investment strategy over the next several years.
The commitment to Realty Fund IV is the second commitment the pension fund has made in this strategy.
The other was a $25m allocation to the Bristol Value Fund II made earlier this year.
Tennessee is still far from reaching its 7% targeted allocation for real estate. Through 30 June 30, it had invested $1.34bn in the asset class - 3.9% of its total plan assets.
In other news, Clarion Partners has closed on two office building purchases totalling $116.2m.
The real estate manager paid $80m to acquire the 100 N Crescent Drive office building in the Golden Triangle area of Beverly Hills, California.
This purchase was completed with a combination of cash and assumed financing of around 50%.
Dean Rostovsky, a director at Clarion, said: "This property is located in a very tight sub-market. The overall vacancy in the Golden Triangle region is 6%. It's very difficult to build new office properties because the area is built out, and there are strict code restrictions for building heights."
Clarion views the property, which has no vacancies and where in-place rents are at market levels, as a core asset.
With the Beverly Hills deal, Clarion has invested more than $500m this year in office deals on the West Coast.
These other transactions have been in San Francisco and Seattle.
Clarion paid $36.2m to acquire Palladian I and Palladian II in Durham, North Carolina.
The real estate manager likes the growth prospects in the Raleigh and Durham area of the state for a variety of businesses such as healthcare, professional services and biotech industries.
Marc DeLuca, managing director at Clarion, said: "We anticipate this growth will continue to support demand for high-quality office space like Palladian I and II."
Author: Jon Peterson