The Maine Public Employees Retirement System (PERS) has committed up to $50 million to the Kohlberg Kravis Roberts (KKR) Real Estate Fund. The investment, approved at the board’s November 14 meeting subject to final due diligence, will help bring the Augusta-based pension system closer to its 10 percent real estate allocation target.
As of September 30, the $12 billion pension plan had allocated approximately 6.1 percent of its total assets to real estate. Maine PERS expects it will take three to five years to reach its target for the asset class, according to its website. Other recent real estate commitments made by Maine include a $25 million investment in High Street Equity Advisors’ High Street Real Estate Fund IV in June and a $100 million investment in Mesa West’s Core Lending Fund in April.
KKR’s debut real estate fund will serve as a diversifier in Maine PERS’ real estate portfolio, as most of the pension’s commitments currently are to core property funds. Although this is Maine’s first real estate investment with KKR, the pension system has had a relationship investing in other asset classes with New York-based private equity firm. Indeed, it has committed $75 million to the KKR Infrastructure Fund in 2010 and, in 2012, it committed $60 million to KKR’s private equity vehicle North American Fund XI and another $60 million to the firm’s Special Situations Fund.
In July, PERE reported that KKR had held a first close on the real estate fund, bringing it halfway to its $1 billion equity target. KKR committed 40 percent of the raised capital, or $200 million, while $300 million came from the Teacher Retirement System of Texas, which also formed a $3 billion strategic partnership with KKR in late 2011. As of June 30, the firm had invested $162.4 million of the equity from the vehicle.