DECEMBER 17, 2013

North Carolina commits $342m to noncore real estate

by Reg Clodfelter

The North Carolina Retirement System has committed $341.8 million to noncore real estate this past quarter, as outlined in board documents released this month. The capital was divided among three separate real estate funds — DRA Growth & Income Fund VIII, Blackstone Real Estate Partners Europe IV and M&G Real Estate Debt Fund III.

DRA Growth & Income Fund VIII, managed by DRA Advisors, received $150 million from the pension fund in October. The value-add fund, which launched this past May, had a $446 million first close in October, putting it well on its way to its $1.35 billion fundraising goal. The vehicle invests in big-box retail, CBD office, community shopping centers, industrial, mixed-use, multifamily, power center retail, suburban office and warehouse properties in the United States. Other investors in the fund include the Pennsylvania Public School Employees’ Retirement System and the Montana Board of Investments.

The $83.1 billion NCRS also committed $150 million to BREP Europe IV, managed by The Blackstone Group. The opportunistic fund launched this past May with a €5 billion ($7 billion) fundraising goal and has an anticipated close date of March 2014. The fund had a €2.67 billion ($3.7 billion) close in November. BREP Europe III closed in 2009 after raising €3.1 billion ($4.3 billion), and BREP Europe IV should continue its strategy of primarily investing in the office, industrial and hotel sectors throughout Europe with a concentration in France, Germany and the United Kingdom. Other recent institutional investors in the fund include the Teachers' Retirement System of Louisiana and the Texas Permanent School Fund.

REDF III, managed by M&G Investments, received a ₤25.7 million ($41.8 million) commitment from the retirement system, which it will use to target senior debt throughout Europe. The fund opened in September 2012 with a ₤500 million ($815.4 million) fundraising goal. The fund has also received commitments in 2013 from the New Jersey Division of Investment and the Wyoming State Loan and Investment Board.

The NCRS has $6.5 billion in capital committed to real estate, as of September 2013, representing 7.81 percent of its portfolio. Its target allocation to real estate is 8 percent. The system has received 11.8 percent returns on this part of its portfolio during the past 36-month period. Its real estate portfolio is divided between 33 percent core investments, 20.5 percent value-add investments, 36.6 opportunistic investments and 9.9 percent timberland. It has 83.2 percent of its capital invested in North America.

Forgot your username or password?