Oregon Investment Council, Tigard, agreed to invest an additional $10 million in Western National Realty Investors Fund II and gave preliminary approval to make an additional commitment of up to $10 million to Fortress Investment Fund III, said James Sinks, communications director.
The council, which oversees the $45.8 billion Oregon Public Employees Retirement Fund, Salem, originally committed $100 million to the Western fund in 2007. Western is asking existing investors to make up the 9% commitment made by Lehman Brothers, which is under Chapter 11 bankruptcy protection.
Fortress wants a total of $80 million from existing investors to pay down $35 million in margin debt in a portfolio company, Gagfah, and $20 million for portfolio company Nationstar Mortgage. Fortress also needs $20 million for Eurocastle Investment, a European property fund.
In exchange for the additional capital, Fortress will give the council either subordinated debt or equity, giving the council first priority for distributions and will not charge fees on the new commitment.
The council’s additional Fortress commitment is subject to real estate consultant Partners Group’s satisfaction with approval of the structure, Mr. Sinks said.
Separately, the council shifted a $70 million REIT portfolio benchmarked to the Wilshire Real Estate Securities index to LaSalle, which already manages $180 million in REITs, from Cliffwood Partners, Mr. Sinks said. Cliffwood, a hedge fund manager, is getting out of the REIT management business.
The council also committed up to $5 million in a Starwood Capital subsidiary, SH Group, to brand and manage hotel chains, Mr. Sinks said.
