Investors - JUNE 24, 2014

Florida commits $250m more to noncore real estate

by Reg Clodfelter

The $178.2 billion Florida State Board of Administration has committed $150 million to Starwood Opportunity Fund X, managed by Starwood Capital Group, and $100 million to Europa Real Estate Fund IV, managed by London-based Europa Capital.

The board recently decided to commit up to $600 million to noncore real estate in 2014 after upping the target allocation to real estate from 7 percent to 10 percent in 2013. These commitments, combined with a $75 million commitment to European Property Investors Special Opportunities Fund III, managed by Tristan Capital Partners, and a $50 million commitment to Carlyle Realty Partners VII, managed by The Carlyle Group, both in March, leaves the board room to commit up to $225 million more to noncore strategies by year’s end.

The board also invested $31 million in three student housing complexes, two at the University of South Florida in Tampa and one at Marquette University in Milwaukee, through an existing relationship with Heitman, though the board declined to comment on whether it expected core-like returns from these investments or not.

Starwood’s SOF X launched in January 2014 with a $4 billion fundraising goal and a $350 million target for its first close in June. It has already surpassed that target, receiving a $50 million commitment from the Illinois Municipal Retirement Fund and a $300 million commitment from the Teachers’ Retirement System of Illinois, among others. The opportunistic fund will invest in a wide variety of property types in the United States and Europe and is reportedly seeking gross returns in the 18 percent to 20 percent range.

Europa’s EREF IV, which launched in August 2012, is seeking €750 million ($1.02 billion) to opportunistically invest in a range of property types and debt in Europe. The fund will focus on more liquid European real estate markets in Europe, such as the United Kingdom, Germany and France.

As of April 30, 2014, the FSBA had an actual allocation to real estate of 7.7 percent, leaving room for approximately $4.1 billion of further investment into real estate before it reaches its allocation target. 

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