The Teachers’ Retirement System of Louisiana (TRSL) has approved $125 million in commitments to the latest offerings from Lone Star Funds and The Carlyle Group. At its July meeting, the $16.66 billion pension approved one commitment of up to $75 million to Lone Star Fund IX and another of up to $50 million to Carlyle Realty Partners (CRP) VII.
Through Fund IX, Lone Star is targeting $7.4 billion in equity to invest in residential and corporate debt in Europe, the US and Japan, according to pension documents. In a presentation to the TRSL board, consultant Hamilton Lane cited Lone Star’s strategy of “undertaking large portfolio transactions” that can “be purchased at significant discounts,” “experience and global transaction team complemented by in-house asset management and loan servicing platforms” and “attractive performance across prior funds with significant distributions” as reasons for committing to the vehicle. The consultant also noted that prior “key man concerns” around current chief executive John Grayken have been mitigated by the promotion of André Collin to president in January.
According to pension documents, Lone Star is targeting 20 to 30 investments for Fund IX, allocating 50 percent of the vehicle’s equity to Europe, within which it will target distressed securities and NPLs, distressed corporate debt and control investments and lending and servicing platforms. Meanwhile, 40 percent of the fund will be invested in the US in distressed whole loans, structured products and corporate opportunities, while 10 percent of the fund will be invested in Japan, focusing on distressed SME and corporate debt, consumer loans and corporate and private equity.
Carlyle is targeting a $4 billion equity haul for CRP VII. Through the opportunistic vehicle, Carlyle seeks to build a diversified portfolio of multifamily, for-sale residential, industrial, hotel, office, senior housing and retail assets located primarily in New York, Washington DC, Northern California, Southern California and Florida, according to TRSL documents. Hamilton Lane made note of Carlyle’s “experienced and stable team,” “thoughtful approach to creating highly diversified portfolios and prudent use of leverage” and “attractive aggregate performance via prior funds” as reasons for committing to the fund.
By writing $10 million to $30 million equity checks, Carlyle will focus on single-asset transactions and avoid portfolio acquisitions and larger assets in order to avoid concentration risk, the documents noted. While CRP VI has a 55 percent exposure to development, Fund VII only will have a 20 percent exposure to development and renovation projects.
In May, TRSL made another investment in private real estate debt, committing $75 million to Colony Capital’s Colony Distressed Credit Fund III, which has a $1 billion equity target.