UPDATED: New Mexico to invest in new Pru, Crow funds

The $11.27 billion pension plan will be an early investor in the two firms’ latest funds, both of which are targeting first closes by year’s end.

The New Mexico Educational Retirement Board (ERB) is likely to back two recently launched value-added real estate funds, Prudential Real Estate Investors’ Senior Housing Partners (SHP) V and Crow Holdings’ Crow Holdings Realty Partners VII. The $11.27 pension plan is expected to commit $35 million each to both funds at its investment committee meeting this week.

PREI is aiming to raise $500 million in commitments for SHP V, which will invest in independent living, assisted living and memory care facilities primarily in the US. A first close for the fund is slated for the fourth quarter. Meanwhile, Crow is pursuing its largest fund ever with Fund VII, with a $1.25 billion equity target. The fund will invest across property types, including lodging, office, multifamily, industrial, land and retail, and focus on the coastal markets of the US. The Dallas-based investment firm is expecting to hold a first close on the vehicle in November or December.

Mark Canavan, senior portfolio manager of real assets at New Mexico ERB, said the demographics supported investment in senior housing, with about 10,000 Baby Boomers expected to retire in the US each day over the next 20 years. “At some point in the life cycle, these people are going to need senior housing,” he told PERE. “Because of the financial crisis, the space currently is underbuilt, so there will be a supply-demand imbalance from a burgeoning population.”

As for Crow, Canavan remarked: “They’re not an AUM shop. They’re very interested in the love of the deal.”

New Mexico ERB previously committed $50 million to SHP IV in May 2011. The fund, which also had a $500 million target, ultimately collected $568 million in commitments in April 2012. It also earmarked $50 million to Crow Holdings Realty Partners VI in January 2013. Crow, which originally sought to raise $750 million for the vehicle, went on to hold a final close of approximately $1 billion in June 2013. 

As of June 30, the pension plan was 5.4 percent allocated to real estate, against a 5 percent target. However, that same month, it raised its long-term asset allocation target in the asset class to 7 percent.