SFERS commits to TriGate’s second fund

The $15.6 billion pension plan has approved a contribution to an emerging US real estate manager after previously committing to Brookfield’s and Rockpoint’s opportunistic vehicles.

The San Francisco Employees’ Retirement System (SFERS) has contributed to TriGate Capital’s latest real estate opportunity fund as part of its plan to increase its allocation to opportunistic and value-added real estate strategies.

At its 10 October board meeting, the $15.6 billion pension plan approved a commitment of $40 million to TriGate Property Partners II, an opportunistic fund seeking $300 million in total equity commitments. According to sources, the Dallas-based private equity real estate firm is looking to invest between $5 million and $20 million in diversified properties across the US through Fund II.

The commitment to TriGate marks SFERS’ third opportunistic investment this fiscal year. In July, the pension plan committed $44 million to Rockpoint Group’s $2 billion vehicle, Rockpoint Real Estate Fund IV. In August, it contributed $50 million to Brookfield Asset Management’s $4 billion fund, Brookfield Strategic Real Estate Partners. One source told PERE that, with Rockpoint making mid-sized investments on behalf of its commingled vehicle and Brookfield making large investments, investing in TriGate, which plans to make smaller investments, gives SFERS broad coverage across the entire opportunistic investment spectrum. 

In June, it was announced that SFERS planned to increase its allocation to real estate and put an added focus on opportunistic and value-added strategies. SFERS approved a plan to allocate as much as $400 million to non-core managers for its forthcoming fiscal year. 

The pension plan has a 12 percent target allocation to real estate. Of that allocation, SFERS invested an average of 57 percent in core strategies and 43 percent in non-core investments. Moving forward, in order to pursue higher returns, the retirement system intends to up its investment in non-core real estate to 60 percent and lower its exposure to core to 40 percent. 

TriGate’s first fund, TriGate Property Partners, closed on $120 million in 2007. Fund I only had one investor – the California State Teachers’ Retirement System. According to TriGate’s website, Fund I is fully invested.