AUGUST 29, 2013

CCCERA invests $150 million in distressed real estate

by Andrea Waitrovich

The $5.95 billion Contra Costa County (Calif.) Employees Retirement Association (CCCERA) has approved two follow-on commitments to opportunistic distressed real estate funds.

CCCERA invested $80 millionin Oaktree Real Estate Opportunities Fund VI (ROF VI), managed by Oaktee Capital Management, and $70 million in Siguler Guff Distressed Real Estate Opportunities Fund II (DREOF II), managed by Siguler Guff Co.

Oaktree’s ROF VI, which has plans to hold a final close on or before Sept. 20, is targeting $2 billion in equity. It is expect the vehicle will surpass its fundraising goal. ROF VI has invested $430 million of committed capital in 22 investments. ROF VI invests across six major categories: commercial real estate, residential real estate, FDIC/bank portfolios, structured finance, non-U.S., and corporate real estate. Of the 22 investments, 50 percent of the invested capital is invested in commercial real estate, followed by residential, 22 percent, and FDIC/bank portfolios, 16 percent.

CCERA made a previous investment in the fund series, committing $50 million to Oaktree Real Estate Opportunities Fund V, which closed in 2011 at $1.3 billion. The fund has made 83 investments.

Siguler Guff’s DREOF II follows its predecessor’s strategy, and its investment objective is to receive opportunistic returns from a distressed real estate multi-manager strategy; at least 60 percent will be invested in funds and separate accounts, and up to 40 percent in co-investments. It has a $750 million fundraising goal. The firm plans to hold an initial close by Aug. 30 with a first close fundraising goal of $150 million. DREOF II has started to invest its capital with 14 new fund investment opportunities, valued at more than $400 million, and eight new co-investment opportunities, valued at more than $200 million.

CCCERA made a $75 million commitment in 2011 and to date has invested $51 million of the commitment in Siguler Guff Distressed Real Estate Opportunities Fund I (DREOF I), which closed in January 2012 with $630 million. DREOF I is fully committed, having made approximately $646 million (103 percent of total capital) of portfolio investments as of June 15. The DREOF I portfolio consists of approximately $414 million committed to fund investments, or 66 percent of committed capital, and $232 million to 20 direct investments, or 37 percent of committed capital. Of its 22 investments, two are European funds, 10 are North American funds, and 10 are North American co-investments. European investments are more than 10 percent of the total portfolio. Approximately half of the underlying investment funds used in DREOF I will likely raise new funds that will be used in DREOF.

These commitments follow CCCERA’s $60 million of investments in two real estate funds in June.

CCCERA has a 12 percent target allocation to real estate, or $744 million, and has an actual of $419 million to real estate. Recent commitments made by the pension fund follows CCCERA’s real estate plan, which was approved in May, investing approximately $241 million in closed-end real estate funds.

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