New Jersey backs PW Real Assets

The state pension plan has made its biggest commitment yet to Leon Bressler’s real estate platform, following its recent spinout from Perella Weinberg.

The New Jersey Division of Investment (NJDOI) will invest up to €90 million in PW Real Assets (PWRA)’ third fund after the firm spun out from Perella Weinberg Partners LP in July.

This is the first fund for Leon Bressler’s new London-based company since the split. PWRA will continue its focus on European real estate investments across property types, according to NJDOI meeting materials. The firm invests in both properties and private operating companies. The target fund size is €1.25 billion with a hard cap of €1.5 billion.

This investment continues NJDOI’s involvement in two earlier funds, which were part of Perella Weinberg Group. The new fund, along with PWRA’s 20-person staff and management, is independent from the New York-based advisory and asset management firm – Bressler is no longer a Perella Weinberg active limited partner. Bressler, the former chairman and chief executive of French property giant Unibail, set up Perella Weinberg’s first real estate fund in 2006 and raised two funds before the separation.

The latest investment represents NJDOI’s biggest commitment to the PWRA funds to date. NJDOI, a $79 billion pension fund, previously committed €75 million to the second fund in May 2013.

In the meeting materials, NJDOI praised the firm’s internal commitment to the fund, with senior management investing at least €20 million, including €17 million from Bressler. The pension fund will also benefit from 2.5 percent carried interest and a 25 basis point drop in the management fee, which will save an estimated $5 million over the life of the fund. PWRA did not use a placement agent.

The fund focuses on Western Europe, especially the UK, Germany, France and Spain. Its target return is 9 percent, according to NJDOI documents. PWRA’s first fund has returned a net internal rate of return of 15 percent, and the second has returned 11 percent net IRR, according to NJDOI.

NJDOI’s real estate investments have outperformed its total fund in the fiscal year ending June 30. Real estate garnered a 15.48 percent returns and real estate debt saw an 8.23 percent returns, compared with 4.16 percent for the overall portfolio.