Hawaii Pension Commits $105 Million to Non-Core Real Estate


The Hawaii Employees’ Retirement System approved three commitments Thursday to three real estate funds, totaling $105 million.

The pension system has worked with all three funds previously, and that familiarity played a role in the new commitments.

From IPE Real Estate:

The pension fund approved follow-on commitments of $40m each to Almanac Realty Investors’ Securities VII and AG’s Core Plus Realty Fund IV, as well as a $25m allocation to Prudential’s Senior Housing Partners V fund.


Hawaii Employees is one of the first pension funds to commit to Almanac Realty VII.

The fund had previously made a $20m commitment to Almanac Realty VI.

The manager, which declined to comment, is seeking a total capital raise of $1bn for the latest fund, according to industry sources.

Typically unleveraged, the fund will be backed by the manager with a 1% commitment of the total capital raise, or $10m.

With a targeted IRR of 12-14%, all of the capital will be invested in the US.

Almanac will look to provide growth capital for private real estate operating companies and public REITs.

Angelo Gordon will buy existing sub-performing office, retail and industrial assets for its Fund IV, placing a heavy emphasis on the top-15 US markets.

Hawaii had approved a $25m allocation to the manager’s Core Plus Realty Fund III.

Pramerica Real Estate Investors is seeking a $500m capital raise for Senior Housing Fund IV, which will invest in independent and assisted living and memory care.

Hawaii Employees had previously allocated $20m to Prudential Senior Housing Fund III.

Hawaii, which could make additional investments in non-core real estate funds, will be conducting an asset liability study next year, with the help of its investment consultant, Pension Consulting Alliance.

The outcome of this study could change its future target allocation for real estate from its current 7% allocation.

The Hawaii Employees’ Retirement System manages $12.7 billion in assets for 115,000 members.


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Pennsylvania Public Schools Fund Commits $200 Million To Real Estate

businessman holding small model house in his hands

The Pennsylvania Public School Employees’ Retirement System (PSERS) has announced its decision to allocate an additional $200 million to its real estate portfolio; $100 million will go to the AG Core Plus Realty Fund IV, which targets a return of 14-15 percent before fees.

From IP Real Estate:

The plan made two new $100m commitments to the AG Core Plus Realty Fund IV and the pension fund’s in-house co-investment and secondary real estate programme.

Pennsylvania is the second US public pension fund to approve a new commitment to Realty Fund IV, following the Illinois State Board of Investment, which made a $30m allocation.

Courtland Partners, the real estate consultant for Pennsylvania, said Angelo Gordon & Co would continue its core-plus strategy of acquiring equity interests in high-quality assets likely to appreciate over time.

The fund will target underperforming office, retail, apartment and industrial assets, with an emphasis on the Top 15 US markets, shunning development projects.

Most assets will be in the US, although the fund can invest as much as 25% outside North America.


Targeted gross returns for the fund are 14-15%, with the current income component of the return projected to be 7-8%.

The fund will have a leverage component of 55-65%.

Pennsylvania has now committed a total of $200m to in-house co-investments and its secondary investment strategy.

The capital can be invested via co-investments on specific transactions with other funds, as well as by buying out other limited partners from existing positions in funds.

PSERS is also exiting the Prologis North American Industrial Fund, a fund of logistics and distribution facilities in the U.S.

PSERS committed $200 million to that fund in 2006, but the investment is now thought to be worth $167 million.