University of Michigan, Ann Arbor, committed a total of $167 million to seven alternative investment funds.
In real estate, the $9.8 billion UM endowment committed €25 million ($33 million) to BLG Turkish Real Estate Fund II, managed by BLG Capital/Bilgili Group; $30 million to Related Energy Focused Real Estate Fund, managed by The Related Cos.; and $20 million to Thackeray Partners Realty Fund IV.
The university’s endowment also committed $3.5 million in response to a call for more money from co-investors in the Phoenix Asia Real Estate Co-Investment, offered by Phoenix Asia Real Estate Investments III. The co-investment is in a Shanghai mixed-use development project that has experienced “unexpected delays” and requires additional capital from investors, said Douglas L. Strong, interim executive vice president and chief financial officer of the university, in materials presented to the board of regents for its Thursday meeting.
UM committed $10 million to the co-investment vehicle in February 2012. There is a possibility an additional $500,000 will be called by the co-investment manager in early 2015, Mr. Strong said. The funds are managed by Phoenix Property Investors.
UM investment staff also committed additional capital of C$769,000 (US$622,000) to Modern Resources Inc., a co-investment set up by private equity manager ARC Financial through ARC Energy Fund 7. Modern Resources is a startup company by the fund created to make acquisitions in western Canada. The call for additional money from co-investors is in response to “attractive deal flow and increased capital costs,” Mr. Strong told trustees in his meeting report. In March 2013, UM committed C$5 million to the Modern Resources co-investment.
At every regents meeting, the university’s CFO informs the board about commitments the investment staff has made to new funds using the same strategy that are offered by existing managers. Regents’ approval is not needed for these commitments.
Regents approved the recommendations of Mr. Strong and UM’s investment staff to commit a total of $80 million to two new private market funds.