Wisconsin: Brexit could help US RE

The pension fund also allocated $280m to a real estate fund and a separate account at its most recent meeting.

The UK’s vote to leave the European Union could propel US real estate markets, according to the State of Wisconsin Investment Board.

“Brexit may increase demand for US real estate as our market is deemed the safest,” the pension fund said in a market outlook report for its Wednesday board meeting. “Gateway cities [are] likely to benefit.”

SWIB highlighted the London and southeast England office markets – submarkets to which the pension fund has little exposure – as the most likely areas to experience fallout from the vote.

Separately, SWIB disclosed in its meeting materials that it earmarked capital for two US real estate investments during the second quarter. The pension fund committed $150 million to Blue Vista’s student housing vehicle, Blue Vista Student Housing Select Strategies Fund.

The firm launched the fund at the end of 2015 with a $300 million target, and held a first close in January on $55 million, according to a filing from the US Securities and Exchange Commission.

“We appreciate the continued support of a valued client as sophisticated as SWIB and we cannot comment further as we are in the middle of marketing the fund,” Blue Vista’s chief executive Peter Stelian told PERE.

Blue Vista’s latest publicly disclosed student housing transaction was the May sale of the Pavilion on 62nd, a 312-unit apartment property in Gainesville, Florida, according to real estate data provider Real Capital Analytics. Blue Vista sold the complex, located at 1000 SW 62nd Boulevard, to student housing operator Pierce Education Properties for $22 million, according to RCA.

In the second quarter, the pension fund also wrote a $130 million check to O’Connor Capital Partners, a New York-based private equity firm, for the acquisition of the Shops at Canal Place (pictured) through a separate account. O’Connor purchased the New Orleans luxury shopping center for $235.4 million in February, according to RCA. The 259,000 square foot mall’s major tenants include high-end department store Saks Fifth Avenue, jeweler Tiffany’s and luxury retail brand Armani. The shopping center was 96 percent occupied in February, according to RCA.

The deal “represented a rare opportunity to acquire a premier retail property with significant upside potential in a high barrier-to-entry market, in a prime tourist location with millions of tourists visiting annually,” William O’Connor, the firm’s chief executive, said in a statement at the time.

The investment came after SWIB said at its April meeting that it planned to invest between $750 million and $1 billion in real estate this year, largely through separate accounts and joint ventures, PERE previously reported. At its April meeting, the pension fund noted that separate accounts give the board total discretion but take up the most staff time.

SWIB managed $6.2 billion in real estate assets out of a total portfolio of $99 billion as of December 31.