By Jon Peterson
Pension funds across the country like the multifamily market, and when given a chance, some are looking to extend their commitment into this dynamic market. One such pension fund, Oregon Public Employees Retirement Fund, has awarded New York City-based Abacus Capital Group a new $400 million allocation for this very purpose, as stated in a board meeting held by the Oregon Investment Council. This new capital will be invested in a mixture of apartments on a nationwide basis that could include some transactions on the West Coast ranging from San Diego to Seattle.
One part of the new commitment was for $250 million, which will expand an existing separate account relationship between the pension fund and the manager. This new capital is a follow-on to the first $250 million commitment issued by Oregon PERF to Abacus in May of 2020. The name of the separate account is Abacus Multifamily Associates.
Abacus has invested almost all of the capital from the initial allocation. “We didn’t want the manager to be forced to find a small deal to finish off the capital from our allocation in 2020, and so we awarded them some additional capital,” said Anthony Breault, senior real estate investment officer for the Oregon State Treasury.
The investments for the initial capital for the separate account were two purchases on the West Coast and the acquisition of a complex in Kansas City. One of the deals on the West Coast was the $144 million purchase of the 334-unit Ridgedale Apartments in Bellevue, Wash. that closed in September of last year. There was an additional purchase of a property in San Diego, Calif., as well, however, Oregon would not comment on any additional details regarding this acquisition.
The separate account has been structured in a way that allows Abacus full investment discretion in order to make final investment decisions on its own without the assistance of the pension fund. The investment strategy calls for the account to acquire apartments that are considered to be core or core-plus type assets. The maximum amount of leverage planned for the portfolio is 45 percent. The account will look to hold onto properties for seven to 10 years.
The other $150 million commitment approved by Oregon PERF for Abacus was for the Abacus Multifamily Partners Value-Add Fund VI. The targeted hard cap capital raise for the fund is $1.45 billion, according to sources familiar with the commingled fund. It will look to invest in value-add apartment assets nationwide. The return projections for the fund are net IRRs in the mid-teens.