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Real estate debt

CalSTRS, POBA co-invest $317 mn in US debts in 2021

Two retirement funds launch $600 mn debt fund in 2021, in their fourth co-investment platform

Oct 15, 2021 (Gmt+09:00)

New York (Photo: Getty Images Bank)
New York (Photo: Getty Images Bank)

The California State Teachers’ Retirement System (CalSTRS) and South Korea's Public Officials Benefit Association (POBA) have invested a combined $317.2 million in US real estate debts so far this year via their $600 million co-investment fund, according to a local media report.

The debt investments were made on three multifamily housing facilities and a multi-asset portfolio, the Financial News said on Oct. 15.

Earlier this year, CalSTRS and POBA each contributed $297 million to the joint fund to invest in senior debts against US commercial real estate, targeting a 7-8% internal rate of return. The fund marked their fourth co-investment platform since 2018.

PCCP LLC, a Los Angeles-based real estate investment manager, is managing the $600 million debt fund, to which it contributed the remaining 1% of the committed capital.

Details of the $600 million debt fund's investments year to date

Investment Asset Amount of Investment (Years to Maturity) Loan-to-credit ratio
A 405-unit multifamily building in Sacramento, California (To be completed in mid-2022) $105 million
(4-5 years)
64.4%
A 225-unit multifamily property in Mount Sinai, New York (Completed in March 2021) $85 million
(3-5 years)
70.8%
A 340-unit multifamily building in Houston, Texas $70.7 million
(3-5 years)
69.2%
A multi-asset portfolio in Denver, Colorado (11,146 square meters) $56.6 million
(4-5 years)
67.3%
Source: Financial News

Between 2018 and 2019, CalSTRS and POBA had launched two $400 million joint ventures to invest in senior debts against US office and commercial buildings, targeting an IRR in the 7% range.

Last year, they set up a $312.5 million JV to invest in equities in US multifamily properties for a 7% IRR.

POBA is a $15 billion retirement fund for South Korea's provincial government employees. CalSTRS manages $312.2 billion worth of assets as of end- September​.

insight@hankyung.com

Yeonhee Kim edited this article.

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