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POBA, US pension fund to launch $400 mn JV to co-invest in real estate debt

Apr 29, 2018 (Gmt+09:00)

The Public Officials Benefit Association (POBA) and a California pension fund will inject $200 million each into a joint venture they are setting up to invest in US senior real estate debts, targeting annual returns in the 7% range.

The $400 million venture will be managed by PCCP LLC, a Los Angeles-based real estate investment manager.

It will make project-based co-investments for the committed capital, with a term of eight years which can be extended by up to two years, according to investment banking sources on April 27.

The sources declined to identify the California pension fund which local media reported managed $220 billion of assets at the end of 2017.

California State Teachers’ Retirement System’s AUM topped $220 billion at the end of last year, according to its statement.

The joint venture launch comes after POBA CIO Dong-hun Jang said in January that he was considering forming project-based joint ventures with global pension funds in search of high-quality alternative assets.

The $10 billion retirement fund plans to expand co-investments with the world’s largest pension schemes to position itself as a major limited partner of leading investment companies.

It has been employing various investment strategies, including separately managed accounts for co-investments in Europe’s real estate and Australia’s infrastructure. It is also diversifying across different geographic regions to reduce currency risks.

According to its latest announcement, POBA targets an average 4.7% return on investments in 2018, versus last year’s 10.9% which was bolstered by bullish equity markets.

In 2018, it plans to allocate 24.7% of its investments to global alternative assets, compared with 29.1% for domestic alternatives.

By Daehun Kim

Yeonhee Kim edited this article

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