Investors - MARCH 17, 2014

Florida to invest up to $600m in noncore real estate in 2014

by Reg Clodfelter

The $176.4 billion Florida State Board of Administration is looking to invest up to $600 million in noncore strategies in 2014, according to Dennis MacKee, director of communications with the board. This decision comes on the heels of the board’s resolution in 2013 to up its allocation to real estate from 7 percent to 10 percent. As of Dec. 31, 2013, the FSBA has an allocation real estate of 7.18 percent.

The board recently committed $75 million to the European Property Investors Special Opportunities Fund III, managed by Tristan Capital Partners. The fund launched in August 2012 with a €750 million ($1.04 billion) fundraising goal, which it exceeded by more than 20 percent when it held a €950 million ($1.32 billion) final close last month, around which time Tristan Capital also announced many of the fund’s first deals.

The value-added/opportunistic fund will invest in Western and Central Europe across the major property types. It will target investment returns of 15 percent to the investor, and with a maximum LTV ratio of 60 percent, will have as much as €2.4 billion ($3.34 billion) in investment capability.

The fund received commitments from a total of 36 institutional investors, 22 of which were committing with Tristan Capital for the first time. Many of the new investors, including the FSBA, were from the United States, where approximately 40 percent of the total capital was raised. Another 40 percent of the capital came from investors from Europe and the Middle East, with the final 20 percent coming from Asian investors.

The FSBA may invest more of the up to $600 million set aside for noncore strategies in Europe, though the board has not allocated a specific amount at this time.

“It depends on the opportunity set that presents itself,” MacKee says, regarding whether the board intends to make further investments in Europe at this time.

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