New Jersey to invest another $175m in Capital Trust

The Garden State’s investment division is looking to purchase the portion of CT High Grade Partners II in which General Motors has invested. The vehicle, which focuses on real estate debt, is managed by Capital Trust.

The New Jersey Division of Investment is looking to buy the remaining stake it doesn’t own in a real estate debt vehicle run by Capital Trust.

According to pension documents, the Garden State’s investment division has proposed an investment of $175 million to purchase a roughly 25 percent interest in CT High Grade Partners II from the GM Pension Trust and GM Asset Management (GMAM), two affiliates of General Motors. 

In 2008, New Jersey invested in CT Partners II alongside the GM Pension Trust “in order to opportunistically invest in high-grade real estate-related debt,” the documents stated. “The fund is invested in a diversified portfolio of fixed-rate, core commercial real estate debt and debt-related instruments,” including investment-grade securities such as CMBS, REIT debt and whole loans. The investment division’s director Timothy Walsh confirmed the transaction via email, but did not provide additional details. 

CT Partners II has generated strong risk-adjusted returns and has a current yield to maturity of more than 7 percent. The vehicle is managed by Capital Trust, a REIT co-founded by Sam Zell and John Klopp, the current co-chief executive of Morgan Stanley Real Estate Investing. Currently, New Jersey owns approximately $473 million, or 75 percent, of the vehicle through a partnership run by GMAM. 

Earlier this year, New Jersey approached General Motors about the potential to purchase the two investment stakes held by its affiliates. By completing the transaction, the state pension will become the primary investor in CT Partners II, with approximately $650 million invested in the vehicle. In addition, it will give New Jersey the ability to better monitor investments, provide input into major decisions and manage portfolio risk.