Oregon forms $200m separate account with Amstar

The Denver-based investment firm will make value-added investments in all property types across the US on behalf of the $62.2 billion pension plan’s new account.

The Oregon Investment Council has formed a value-added separate account with Amstar Advisors to invest in all property types across the US. Sources familiar with the matter confirmed with PERE that the Oregon Public Employees’ Retirement Fund (OPERF) has agreed to commit $200 million to a separate account managed by the Denver-based investment firm on behalf of the $62.2 billion pension plan. Representatives from Amstar declined to comment. 

Documents from the pension plan reveal that the separate account will consist of a commitment from OPERF to be invested alongside the European family office that founded Amstar in 1987. Investments in the account are anticipated to be structured at a ratio of approximately 60:40 between OPERF and the family office, respectively, with an additional $2 million in co-investment capital from Amstar principals. 

Through the account, Amstar will seek real estate investments across all property types throughout the US and is targeting a net return of 11 percent to 14 percent to investors. The separate account is proposed to have an investment period of up to 36 months with an evergreen term and recyclable distributions.

“The value-added sub-portfolio within OPERF’s real estate investments had an 18.8 percent weighting at December 31 versus a target weighting of 20 percent,” OPERF documents stated. “Given the investment focus, target markets and return profile characteristics, this…separate account will have minimal overlap, if any, with existing joint ventures and commingled funds structures within the OPERF real estate portfolio.” 

In September 2011, Amstar formed a similar separate account with the San Diego County Employees Retirement Association (SDCERA). SDCERA approved a $200 million commitment to Amstar-SD Partners to focus on two investment strategies: the acquisition and restoration of distressed high-quality office assets to core level and the development of core multifamily properties that are expected to yield returns greater than core upon stabilization. In documents posted on SDCERA’s website, Amstar said it actively is pursuing more than $400 million in office acquisitions and more than $400 million in multifamily developments across the US. 

Earlier this month, Oregon approved a commitment of up to $400 million to Lone Star Funds’ Lone Star Fund VIII on behalf of OPERF. The fund, which is targeting $5 billion in commitments, will invest in distressed debt, distressed real estate and banks and finance companies where real estate can be acquired on an opportunistic basis. Lone Star will invest globally on behalf of Fund VIII, with an estimated 40 percent of its capital going to the US, 40 percent to Europe and 20 percent to Japan. 

OPERF had $7.4 billion of assets under management in real estate at the end of March, representing 11.9 percent of its overall portfolio, slightly above its 11 percent target for the asset class.