The Texas Permanent School Fund has approved up to $225 million in new real estate commitments, planning to invest up to $75 million each in recent funds from Ares Management, The Carlyle Group and Invesco Real Estate.
Ares US Real Estate Fund VIII, formerly known as AREA Value Enhancement Fund VIII, has a $750 million target. Through the fund, Ares plans to invest in multifamily, industrial, hotel, retail and office properties in the US, with the goal of creating value through intensive asset management and selling once the business plan for the asset has been successfully completed. Fund VIII, which will target a 15 percent to 18 percent gross internal rate of return, held a first close on approximately $490 million earlier this month. Other investors in the offering include the Pennsylvania Public School Employees Retirement System (PSERS).
Meanwhile, Carlyle is targeting a $4 billion equity haul for Carlyle Realty Partners VII. Through the opportunistic vehicle, Carlyle is seeking to build a diversified portfolio of multifamily, for-sale residential, industrial, hotel, office, senior housing and retail assets located primarily in New York, Washington DC, Northern California, Southern California and Florida. Carlyle will focus on single-asset transactions instead of portfolio acquisitions and larger assets in order to avoid concentration risk. Other investors in the fund include PSERS and the Teachers’ Retirement System of Louisiana, which committed to the fund just last month.
Finally, the Invesco Mortgage Recovery Fund II will invest in mortgage-backed securities and loans both in the commercial and residential sectors. Invesco raised $1.46 billion for the vehicle’s predecessor, Invesco Mortgage Recovery Fund, in 2010, having been pre-qualified as a fund manager for the US Treasury’s Legacy Securities Public-Private Investment Program.
The investments mark the first real estate action from the Permanent School Fund since November, when the board approved a $75 million commitment to The Blackstone Group’s Blackstone Real Estate Partners Europe IV and a €60 million commitment to Tristan Capital Partners’ European Property Investors Special Opportunities III.