Investors - JULY 9, 2014

New Mexico commits $50m to Lion Industrial

by Reg Clodfelter

The $19.2 billion New Mexico State Investment Council has committed $50 million to Lion Industrial Trust, an open-end core/core-plus fund managed by Clarion Partners that looks to own, develop, manage and strategically sell industrial warehouse properties in North America (with a substantial focus on the United States). The investment is a follow-on investment to NMSIC’s original $35 million commitment to Clarion’s LIT in 2012.

“In general, the SIC has been shifting toward larger commitments and deeper relationships with fewer managers,” explains Charles Wollmann, director of communications with NMSIC. “LIT has been a solid manager who has performed well since our original commitment, and we find the distribution and warehouse space attractive.”

LIT opened in 2002 and, as of March 31, had approximately $4.6 billion in assets under management. Though the fund primarily makes core investments, it will also invest in undeveloped land and development projects that could enhance return, though these investments will only represent 5–15 percent of the fund.

Though returns are generally expected to be around 8–10 percent on a leveraged basis with a 4–5 percent annual dividend provided through income, the fund did achieve a one-year net of fee return of 14.27 percent as of Dec. 31, 2013.

NMSIC is currently on target to make $170 million in new core strategic commitments during 2014–2015 to maintain exposures in its target range. The real estate portfolio, which has an actual allocation of approximately 9.5 percent and a target of 10 percent, is currently split 45-55 between core and tactical investments, respectively. 

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