PSERS commits $300 million to real estate

The Pennsylvania pension fund allocated capital to Brookfield’s latest opportunistic vehicle and a Pramerica debt fund.

The Pennsylvania Public School Employees’ Retirement System (PSERS) invested in both real estate equity and debt funds at its meeting last week, according to materials from the pension plan.

PSERS committed $200 million to Brookfield Strategic Real Estate Partners (BSREP) II after allocating the same amount to Brookfield’s predecessor vehicle, which closed in July 2013. The $7 billion fund, which launched last year, is the largest opportunistic fund currently in the market, according to PERE Research & Analytics.

Other investors in Brookfield’s fund include Teacher Retirement System of Texas, which committed $200 million; South Carolina Retirement System, which committed $75 million; and State Universities Retirement System (SURS) of Illinois, which committed $35 million, according to PERE Research & Analytics. Brookfield will commit $2 billion to the fund, according to SURS’ meeting materials.

Brookfield expects to close the fund in the fourth quarter of this year, according to SURS. The firm plans to make between 30 and 45 investments, committing $700 million of equity to six or seven deals and $50 million of equity to 20 to 40 deals. No more than 20 percent of the fund’s capital will be invested in any single deal.

About half of BSREP II’s capital will be deployed in the US, and Brookfield will not invest more than 20 percent in assets outside of North America, Europe, Brazil and Australia, according to SURS. The fund has a net internal rate of return target of 16 percent and a 1.8x multiple.

BSREP I, which launched in 2012, had a net IRR of 20.9 percent as of June 30, 2014, according to SURS.

PSERS also committed £75 million ($106.6 million) to Pramerica Real Estate Capital VI, a real estate debt fund with a £1 billion target run by Prudential.

New Mexico State Investment Council also committed $70 million to the fund, according to PERE Research & Analytics.

Pramerica launched the fund last year and held a closing on January 19 with $200.6 million in commitments from five investors, according to a filing with the US Securities and Exchange Commission. The firm’s predecessor vehicle closed in April 2014 at £265 million, according to PERE Research & Analytics.