Investors - FEBRUARY 27, 2014

Michigan retirement system invests $55m in real estate

by Andrea Waitrovich

The $761 million Wayne County (Mich.) Employees’ Retirement System has invested $55 million in three real estate funds, according to the recently posted minutes of the Feb. 7 meeting.

Detroit-based WCERS invested $25 million in Morgan Stanley Prime Property Fund, a core open-end fund managed by Morgan Stanley. The commingled real estate equity fund is diversified by property type and location, and designed to provide a stable, income-driven rate of return over the long term with the potential for growth of net investment income and appreciation of value.

WCERS also invested $30 million in value-added/opportunistic vehicles. The pension fund committed $15 million to Landmark Real Estate Fund VII, managed by Landmark Partners. The value-added fund will make secondary investments in vehicles investing globally and unconstrained by property type.

The pension fund invested $10 million in AEW Partners Fund VII, a value-added/opportunistic closed-end fund managed by AEW Capital Management. AEW VII invests in nonperforming and defaulted loans where the title to the underlying property could be obtained, as well as acquiring high-quality, well-located assets at significant discounts to replacement cost from lenders selling as a result of balance sheet or regulatory pressure. The majority of investments will be in North America, but approximately 15 percent of the portfolio can be invested outside the region.

The final investment was a $5 million commitment to Dune Real Estate Partners’ Dune Real Estate Fund III. The opportunistic vehicle targets distressed commercial and residential real estate, as well as nonperforming loans and debt, throughout the United States.

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