Nebraska re-ups with Landmark RE

The Nebraska State Investment Council has committed an additional $7.5 million to Landmark Real Estate Partners VII, according to documents from Nebraska’s August board meeting.

Fund VII launched earlier this year with a $1 billion target. The fund has collected $670 million through 11 August, after holding a first close on $560 million in April.

Fund VII is Landmark’s largest real estate secondaries fund to date and also includes a separate co-investment vehicle for overflow deals and a $200 million co-investment fund with the Ohio Public Employees Retirement System. Fund VII is expected to hold a final close in December.

Landmark declined to comment.

Nebraska previously committed $40 million to Fund VII from its defined benefit portfolio, but has decided to commit an additional $7.5 million from its endowment fund, as part of its non-core real estate strategy for 2015, according to the documents.

Limited partners in Fund VII will pay a 1 percent management fee. The preferred return rate is 9 percent and cash flows are split 60/40 (GP/LP) until the 12 percent carried interest is met. Other LPs in the fund include the Kentucky Teachers’ Retirement System and the Board of Regents State of Iowa, according to PEI’s Research and Analytics division.

Fund VII will invest in limited partner interests and partnerships in real estate funds on the secondaries market. The fund will target a diverse portfolio of assets spanning core, value-added and opportunistic funds and up to 30 percent of the fund could be invested outside the US.

Landmark believes more investors are actively managing their real estate portfolios, due to the significant flow of capital into non-core real estate strategies between 2005 and 2008, the Nebraska documents disclosed.

The fund hasn’t made any investments yet, however Landmark has multiple deals in its pipeline that could close before year-end.

Landmark’s prior real estate fund, a 2010-vintage, raised $718 million, including a $40 million commitment from Nebraska, according to PEI data. The fund was generating a 29.8 percent net IRR as of 31 March, according to Nebraska documents. All five of Landmark’s prior real estate secondaries funds have generated a net internal rate of return of 27 percent.

Nebraska had $20.9 billion of assets under management as of 31 March. The investment council has previously committed to real estate fund of funds managed by The Carlyle Group’s Metropolitan Real Estate Equity Management, according to PEI data.