University of Michigan commits $150m to real estate, energy funds

by Jody Barhanovich

The $11.6 billion Regents of the University of Michigan committed $150 million to real estate and energy funds at the end of 2016, according to spokeswoman Erin Katz.

On the real estate side, the endowment committed $30 million to Virtus Real Estate Capital II, managed by Virtus Real Estate Capital. The closed-end fund will seek opportunities in niche real estate sectors throughout the United States, including student, senior and workplace housing; medical office; and self-storage. The fund seeks to raise a maximum of $500 million in equity commitments.

The endowment also committed $50 million to Lone Star Fund X, managed by Lone Star Funds. The fund recently held a $5.6 billion final close, exceeding its $5 billion equity fundraising target.The global opportunistic distressed fund plans to invest in the United States, Europe and Japan. The endowment previously committed $13.4 million to Lone Star Fund VIII, in May 2013, which held a $5.1 billion final close the same month.

In addition, University of Michigan committed to two energy funds, comprising a $50 million commitment to Blue Water Energy Fund II and a $20 million commitment to Kayne Anderson Energy Fund VII.

Blue Water Energy Fund II, managed by Blue Water Energy, opened in August 2016 and will invest in European and U.S. energy.

Kayne Anderson Energy Fund VII, managed by Kayne Anderson Capital Advisors, held a $2 billion final close in October 2016, meeting its fundraising target. The fund plans to continue Kayne Anderson’s strategy of partnering with high-quality management teams focused on the upstream oil and gas sector of North America. University of Michigan previously committed $30 million to Kayne Anderson Energy Fund VII in March 2016, raising its total commitment to the fund to $50 million.

As of Dec. 31, 2016, University of Michigan has a target allocation to real estate of 10 percent, with an actual allocation of 9.1 percent. The endowment recently committed $50 million toCabot Industrial Value Fund V.

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