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$240 Million Portfolio, 29 Properties, 4+ Million Square Feet

The Challenge

A large public pension fund's real estate allocation was 50 percent underfunded and sought to place a large amount of money in real estate to build the portfolio to meet the allocation requirement. The investor’s primary objective was to provide improved diversification to the overall investment portfolio by investing in real estate.

Secondary objectives were to generate an enhanced yield and to provide stable cash flows. The majority of the investor's existing portfolio is located in the western United States. Although guidelines for geographic diversification are keyed more toward the underlying economic factors of a particular geographic region than to simple percentage allocation, the investor's preference was to increase the portfolio's geographical diversification by investing in regions other than the West. The investor also was seeking to provide greater product type diversification by acquiring more warehouse and retail properties.

The Solution

CBRE Investors acquired a $240 million portfolio of low-risk, net-leased investments. The portfolio consisted of 29 properties with more than 4 million square feet of industrial and office space. The buildings are located in Boston, New York, Philadelphia, Chicago, Detroit, Oakland and 12 other cities. The projected IRR was nearly 11 percent.

This was an excellent investment, meeting the pension fund’s low-risk investment criteria and providing geographical, product-type and tenant-type diversification. This transaction also met the objective of increasing the pension fund’s overall investment in real estate.