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Investors - DECEMBER 1, 2014

VRS commits $350m to real estate, energy

by Reg Clodfelter

The $65.5 billion Virginia Retirement System has committed $350 million to real estate and energy, divided between three managers.

VRS has committed $100 million to real estate through Blackstone Property Partners, an open-end core-plus fund managed by The Blackstone Group, and $250 million to energy through two separate managers, PetroCap and Sheridan Production Company.

BPP, Blackstone’s first core-plus open-end fund, is reportedly targeting a haul of around $5 billion to achieve 9–11 percent returns from office, retail, multifamily and industrial properties in major markets in North America. The fund has received a lot of interest from institutional investors of late, receiving $100 million from the Texas Permanent School Fund in September, as well as a $100 million commitment from the Arizona State Retirement System and a $30 million commitment from the Oklahoma Police Pension & Retirement System, both in October.

The retirement system’s commitment to Sheridan was worth $150 million and went to Sheridan Production Partners III-A. SPP III launched earlier this year and will likely follow a similar strategy to its predecessor, which funded the acquisition of onshore producing oil and gas properties in the United States. SPP II closed in November 2010 after raising $1.8 billion. Other institutional investors in SPP III include the Washington State Investment Board, which committed $200 million to the fund in September.

The retirement system’s other commitment to energy was for $100 million and went to PetroCap Partners II, managed by Dallas-based PetroCap. The $350 million energy fund had received $306.2 million by early November, according to a filing with the SEC.

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