By Jon Peterson
State of Wisconsin Investment Board (SWIB) has approved two investment allocations for apartment funds with a couple of Bay Area-focused firms. The first allocation of $150 million is with San Mateo-based Essex Properties Trust for a new joint venture to invest in apartments, as stated by the pension fund in a board meeting document. Another $100 million allocation was awarded to FPA Multifamily, which will also focus on the same property type.
Both Essex and FPA did not respond to several phone calls and emails seeking comment for this story.
With Essex, SWIB is forming a new joint venture, which will be named WESCO V. The pension fund has placed this investment into the core sector of its real estate portfolio. The capital will be invested in properties in California and the State of Washington. This will most likely include the San Francisco Bay Area and Seattle.
SWIB sees a particularly strong performance in the apartments and industrial sectors and continues to allocate funds for investments in those areas. The pension fund stated in an email that ”apartment and industrial fundamentals are still strong driven by demographic and secular changes.”
The ownership of any assets that are placed into WESCO V will be split 50/50 between the pension fund and Essex. The amount of leverage planned to be included in the venture is up to 50 percent.
The second commitment in the amount of $100 million will go to FPA Multifamily, an apartment manager with an office in the San Francisco Bay Area located at 368 Jackson Street. This allocation will be going into the firm’s FPA Core Plus Fund III. This investment will be the first time that the pension fund has invested capital with FPA Multifamily.
The capital from SWIB was part of a $455 million capital raise that was completed for Core Plus Fund III, a fund that will be investing in apartments on a nationwide basis. FPA will be looking for properties that show off strong current income and have the potential for additional value to be created in the future. For this fund, the leverage on the investments will be around 50 percent, same as with the fund managed by Essex.