Deals

Pennsylvania pension commits $100m to RE

The $35bn Pennsylvania State Employees’ Retirement System allocates further funds to RE after returning 22 percent from the asset class last year.

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The Pennsylvania state employee pension plan has made two new commitments totaling $100 million (€64 million) to private equity real estate funds.

The $35 billion (€23 billion) Pennsylvania State Employees’ Retirement System, known as PA SERS, said in a statement it had committed $25 million to Lubert-Adler Real Estate Fund VI in a follow-on investment and $75 million to a new fund of funds run by Clerestory Capital Partners, Oculus Small Cap Real Estate Fund I.

Lubert-Adler, which closed its fifth real estate fund on $1.7 billion in 2006, has focused its funds on opportunistic investments, including traditional assets in the multi-family, office, industrial and hospitality sectors.

The pension board, meeting yesterday, also approved $155 million of follow-on commitments to four private equity funds including $40 million to ABS Capital Partners VI, $50 million to Lime Rock Partners V, $50 million to Madison Dearborn Capital Partners VI and $15 million to Versa Capital Partners II.

As reported on PERE, during 2007 the pension saw returns of 22.6 percent on its real estate investments compared to 17.6 percent in 2006 – an increase of 28.4 percent.

Overall returns on investments last year were 17.2 percent, which it says is nearly double the median return for large US public pensions, and surpassed its 12.8 percent benchmark. Private equity was the pension’s top performing asset class, returning 41 percent compared to 23.2 percent in 2006.

The pension allocates around eight percent of its assets to real estate and 13 percent to private equity.

ABS has investments in business service and technology companies, as well as the healthcare, communications and media sectors while Houston, Texas-based Lime Rock Partners is focused on energy. It closed its fourth energy-focused fund in 2006 on $750 million.

Chicago-based Madison Dearborn Partners, which has just taken part in Canada’s largest-ever agreed leveraged buyout of telecom giant Bell Canada Enterprises, is raising $10 billion for its sixth buyout fund.