From Quebec to India

Caisse de depot is looking to spend C$1.6bn on real estate in India.

In July, Canada's biggest pension fund manager, Caisse de depot et placement du Quebec, made headlines with its acquisition of the Legacy Hotels REIT for C$2.5bn ($2.4 billion; €1.7 billion), paying a 20 percent premium for Canada's largest hospitality REIT.

Focused on the high-end hotel market, Legacy comprises 25 properties in Canada and the US including the Fairmont Le Chateau Frontenac, the Fairmont Royal York and the Fairmont Empress in Canada, as well as the Fairmont Olympic Hotel in Seattle and the Fairmont in Washington, DC in the US.

Now with ambitions further beyond its borders, the Quebec pension giant is planning to invest up to C$1.6 billion in Indian real estate by 2012, according to local press reports. This marks the pension fund manager's foray into the Indian property market, which has already seen considerable interest from investors around the globe.

The Canadian pension fund manager is led by president and chief executive Henri-Paul Rousseau. As at close of 2006, it had more than C$237 billion of total assets under management.

SITQ, the office building unit of Caisse, may have up to 15 percent of its property assets invested in India by 2012, chief executive Paul Campbell said. The division currently owns about C$10.6 billion worth of real estate located in the US, Canada, France, the UK and Germany. SITQ will work with local partners in the country and will most likely focus on cities such as Mumbai and Hyderabad.

Caisse' real estate investments are maintained by three main operational companies: Ivanhoe Cambridge, which specializes in regional shopping centers located in urban areas (affiliated with Simon Ivanhoe in Europe); SITQ, focusing on office buildings in downtown locations and business parks; and Cadim, which invests in core and opportunistic products in all real estate sectors. Caisse also works with a network of affiliates: investments in Canadian senior and student residences are made by Maestro and, in the US, investments in the opportunistic and value-added space are made through New York based real estate investor The Praedium Group.

Morgan Creek closes $260m FoF
Morgan Creek Capital Management closed its Morgan Creek Partners II on $260 million (€177 million). Its limited partners include high net worth individuals, foundations and endowments. The fund, which is the firm's second such vehicle it plans to raise annually, is roughly 80 percent invested, said Nirav Kachalia, a principal on the firm's private investment team. Approximately 20 percent of MCPII's capital will be earmarked for co-investments, with the balance directed to alternative asset classes. Kachalia estimated that of the capital allocated for alternatives, approximately 40 percent will go to buyout funds, 20 percent to real estate funds, 20 percent to energy funds and 20 percent to venture funds. In terms of geographic exposure, Kachalia predicted roughly 50 percent of the fund would be committed to US funds, with the balance headed to those targeting Japan (10 percent), Europe (20 percent) and emerging markets. Morgan Creek was founded in 2004 by Mark Yusko, who from 1998 to 2004 was president and chief investment officer for the endowment of the University of North Carolina at Chapel Hill. “The philosophy of investing is exactly the same as a progressive endowment, we're just serving different clients,” Kachalia said. The firm closed its previous fund of funds in 2005 on $145 million.

MacFarlane closes on $1bn, eyes more
MacFarlane Partners, the San Francisco-based investor in urban and single-family housing assets, has reached a final close on $1 billion for its MacFarlane Urban Real Estate Fund II, a US urban diversified fund. According to a source, that fund is already fully committed to deals, and MacFarlane, founded by former GE Real Estate executive Victor MacFarlane, will soon be in the market seeking to raise another approximate $1.5 billion for a follow-on vehicle. The firm has invested heavily in the Washington, DC metropolitan area through its latest fund. The firm's most recent deal was the Citypoint development in downtown Brooklyn, New York.

RE allocations on the rise
Around the world, institutional allocations to real estate will increase over the next two years, according to limited partners surveyed in the eighth annual Russell Investments Survey on Alternative Investing. In North America, investors will, on average, increase their allocations to 7.3 percent in 2009 from the current 6.7 percent, according to the survey. Leading the pack are endowments and foundations, who will raise allocations to 7.1 percent from 5.9 percent. In Europe, investors plan to increase strategic allocations to real estate to 9.7 percent from 8.9 percent. Australian respondents will move to 10.5 percent from 9.6 percent, while Japanese respondents will move to 5.7 percent from 4.7 percent. Russell Investment noted that respondents noted a strong desire to “diversify their commitments outside of their local region,” according to a press release.

Rockwood opens LA office
Rockwood Capital has opened an office in Los Angeles to target the Southern California market. It currently has a portfolio in the greater Southern California region comprising approximately 1.6 million square feet of office and 1.4 million square feet of retail space; 2,000 apartment units as well as 1,300 acres of land for residential development; and 161,000 square feet of data centers. The new office will be directed by Tyson Skillings and Jeremy Rogers. Skillings worked with Rockwood in the company's San Francisco office and prior to that was a senior analyst at Ernst & Young Kenneth Leventhal real estate group. Rogers was a vice president at Hearthstone Inc. before joining Rockwood and prior to that was a vice president in Credit Suisse First Boston's real estate investment banking group.

Liquid Realty hires Jones as controller
Liquid Realty Partners has appointed Krista Jones as a fund controller. Jones will work within the firm's finance group on accounting, taxation, reporting and related activities of the firm's investments. Jones was previously a financial analyst at Credit Suisse and a senior associate at PricewaterhouseCoopers. The firm recently expanded its investment team with the addition of Stephen Maxon as an analyst in the acquisitions group—the third addition to Liquid's investment team since the beginning of the year.

Probitas adds real estate VP
Probitas Partners has hired Stacy Kincaid as a vice president for its real estate placement and liquidity management teams to work in the firm's San Francisco office. Kincaid, who has experience in real estate transactional and managerial positions, will work on Probitas' project management team, helping fund sponsors raise capital and assisting investors with real estate portfolio management. Prior to joining Probitas, Kincaid was executive vice president of Los Angeles-based AVG Partners.

Ferrero departs Harvard
David Ferrero, formerly a director of real estate investment at Harvard Management Company, has left the company. Ferrero rose to the position of director in 2004 having joined Harvard Management Company in 1997 from AEW. Since that time he spearheaded the company's push into foreign markets, public securities and direct investments. In fiscal 2006, Harvard's property portfolio generated a return of 23 percent. At press time, an employee at Harvard Management said Ferrero was no longer with the endowment and was unaware of where Ferrero could be reached. Ferrero was featured in the June 2007 “Rising Stars” feature of PERE magazine. He is a native of Windsor, Connecticut and a graduate of the University of Pennsylvania. “He's probably one of the most influential LPs out there,” an industry practitioner told PERE in June. “He's also one of the nicest guys you'll meet.”