The Florida State Board of Administration (SBA) earmarked $350 million to real estate funds in the fourth quarter, the pension fund said Monday. The commitments were made through SBA’s strategic investments division, which includes real estate debt-related investments among other substrategies, rather than through its real estate group, which focuses on equity investments in the asset class.
Cerberus Capital Management raked in $200 million from SBA for its fourth opportunistic vehicle, Cerberus Institutional Real Estate Partners (CIREP) IV. PERE reported in November that Cerberus is expected to hit the $2 billion hard cap for CIREP IV at the fund’s final close, likely late this quarter or early in the second quarter, after the firm launched the vehicle in the second quarter of 2015.
SBA, based in Tallahassee, Florida, previously committed $150 million to CIREP III. Other investors in the latest fund include San Francisco Employees’ Retirement Fund (SFERS), which allocated $100 million, and Oklahoma Police Pension and Retirement System, which earmarked $15 million.
Similar to its predecessor funds, CIREP IV will be focused on highly complex or distressed debt and equity real estate transactions where competition is limited, according to SFERS documents. The fund will target gross returns between 17 percent and 20 percent. Roughly half of the capital will be allocated to the US while the remainder will be deployed in Western Europe, according to SFERS.
SBA also committed $150 million to Colony Capital’s first debt fund raised as a public company. The firm has a $2.5 billion target for Colony Distressed Credit & Special Situations Fund (CDCF) IV and held the vehicle’s first close in December, collecting $689 million. SBA previously committed $150 million to CDCF III and $75 million to CDCF II. In April, Colony merged with its publicly-traded mortgage real estate investment trust, Colony Financial, which was subsequently renamed Colony Capital.
Similar to its predecessors in the fund series, CDCF IV will be focused on loan acquisitions, high-yield originations and special situations. However, compared with CDCF III, which collected a total of $1.2 billion in October 2014, the new fund has a larger allocation to Europe, with a 60 percent allocation target to the region, compared with 40 percent for CDCF III, PERE reported in November.
SBA had $171.2 billion in assets under management as of January 29 and has allocated 6 percent of its portfolio to real estate, according to PERE Research & Analytics.