The Oregon Investment Council (OIC) has recommended a new investment for the real estate portfolio of the Oregon Public Employees Retirement Fund (OPERF). At its May investment meeting last week, the OIC recommended a $125 million commitment to Och-Ziff Capital Management’s Och-Ziff Real Estate (OZRE) Fund III.
Documents from the $68.33 billion pension system noted that OZRE III is seeking $1 billion in capital, with a $1.5 billion hard cap, to invest in an opportunistic real estate strategy that may include individual real estate assets or loans, portfolio acquisitions and loan pools, operating companies, structured debt products and public securities. Och-Ziff held a first close on April 30, bringing in approximately $362 million in equity commitments, according to a filing with the US Securities and Exchange Commission.
While OZRE III will focus primarily on the US, up to 20 percent may be invested internationally. Och-Ziff is targeting a pre-tax gross return of 20 percent to 25 percent for the vehicle.
Oregon cited Och-Ziff’s “experienced team and proprietary deal flow,” “diversification with a situationally opportunistic strategy,” “strong track record” and “strong alignment” in its reasons for committing to OZRE III. Documents stated that the investment would be “complementary to OPERF’s existing opportunistic holdings” and would “initiate a partnership with a skilled operator and scalable platform with strong interest alignment and proven ability to tactically deploy capital over various stages of the real estate market cycle.” OIC also noted that Och-Ziff partners and employees would comprise at least 7.5 percent of the commitments, up to a maximum $75 million.
Och-Ziff did not use a placement agent in connection with OPERF’s investment in the fund. Other investors in the offering include the New Jersey Division of Investment, which committed $100 million in March.