The Ohio Bureau of Workers' Compensation (BWC) plans to commit approximately $400 million to non-core real estate funds over the next three years to reach its real estate allocation of 6 percent. To kick off the plan, the $21 billion state workers compensation program has made its first value-added real estate investment for its portfolio.
At its January board meeting, the Ohio BWC approved the recommendation of its consultant, RV Kuhns & Associates, to commit $50 million to KTR Industrial Fund III, a value-added real estate fund targeting $750 million in equity commitments, with a hard cap of $1 billion. The BWC plans to make seven additional non-core investments of $50 million each over the next three years, including two more this year.
According to documents from the system, through Fund III, KTR Capital Partners primarily will target non-stabilized Class A industrial and warehouse properties, in-fill Class B industrial properties and cold storage and e-commerce distribution facilities, as well as distressed debt and recapitalization opportunities. Geographically, the fund will invest in properties primarily in the US, focusing on Los Angeles, New York, New Jersey, Chicago, Miami and south Florida. Beyond that, up to 10 percent of the fund can be invested in Mexico and up to 10 percent can be invested in Canada.
As of December 27, 2012, Fund III has closed on $390 million in commitments. Other investors include the Kansas Public Employees Retirement System and the Fort Worth Employees’ Retirement Fund.
KTR already has made six investments utilizing $150 million of equity on behalf of Fund III. Investments include a one million-square-foot e-commerce fulfillment center in central New Jersey for Amazon.com, a 450,000-square-foot Class A distribution center in Chicago and a 150,000-square-foot in-fill Class B facility in Los Angeles.