Wisconsin commits $215m to real estate

The State of Wisconsin Investment Board (SWIB) agreed to invest $215.4 million with three real estate firms, including Heitman, Blue Vista Capital Partners and Essex Property Trust, during the fourth quarter.

In the largest of three commitments, SWIB earmarked $85.4 million to acquire the University Gateway, a high-end student apartment complex on the University of Southern California campus in Los Angeles, through Blue Vista Capital Partners, a Chicago-based real estate fund manager. The eight-story complex was completed in 2010 by Los Angeles developer Urban Partners, which owned it in conjunction with RCG Longview and The Blackstone Group.

The pension system also committed $60 million to WESCO III, a new operational joint venture with Essex Property Trust, a Palo Alto, California-based real estate investment trust that acquires, develops and manages multifamily properties on the West Coast. SWIB and the REIT each will own a 50 percent interest in WESCO III, which has a total investment capacity of $240 million, according to Essex’s fourth quarter earnings results. In November, the REIT made its first acquisition on behalf of the joint venture, a 264-unit property called Haver Hill in Fullerton, California for $45.6 million. 

In 2011, SWIB committed $87.5 million to WESCO II, another 50-50 programmatic joint venture with Essex. That partnership made a $175 million preferred equity investment in Park Merced, a 3,221-unit apartment community located in San Francisco. The investment is expected to generate a 10.1 percent annual return over its seven-year term.

Lastly, the pension system plans to invest an additional $70 million in Wilson HCF Wisconsin Holdings 3, a real estate debt-focused separate account with Chicago-based investment manager Heitman. The venture reportedly provided a $25 million mortgage to a joint venture between Sterling Bay Companies and Annenberg Investments in 2011 to refinance 300 West Adams Street in Chicago.

SWIB, which is the ninth-largest US public pension plan, invests in commercial real estate as a sole direct owner or through joint ventures and partnerships with outside managers that are diversified by location and property types, as well as in diversified REITs, according to its website.