Washington State Makes New Private Market Commitments

The majority of the $700 million commitment deployed as part of a network of real estate organizations controlled by the pension plan.

The $99.7 billion Washington State Investment Board (WSIB) has committed $700 million to two private market investments, shows board material released after the close of its meeting on Dec. 13.

The largest commitment, $500 million, was a follow-on investment to Evergreen Real Estate Partners, whose ownership ties ultimately back to the board through a web of different organizations and subsidiaries.

Since 2004, WSIB has committed $5.2 billion to Evergreen, which runs 14 real estate firms around the world. Evergreen Real Estate Partners works with Evergreen Investment Advisors, a Chicago-based registered investment advisor. The investment advisor is also a subsidiary of Evergreen Real Estate Partners.  

In turn, Evergreen Real Estate Partners is a wholly owned subsidiary of M3 Capital Partners, which was formed and funded by WSIB to invest in real estate for the pension system.

M3 Capital Partners’ website says it has invested across a broad range of core and alternative real estate sectors, including office, retail, logistics, residential, student accommodation, senior housing, self-storage, cemeteries and funeral homes, medical office buildings, parking, motorway service areas, strategic land, manufactured housing, hotels, and real estate debt.

Those investments include the 2013 purchase by Evergreen Real Estate Partners of Japan’s largest self-storage company, Quraz, for an undisclosed sum.

Stepstone, the board’s real estate consultant, also recommended the additional $500 million commitment to Evergreen, board material shows. The commitment was made by the pension’s system investment staff using delegated authority and bypassed investment board commissioners.

The other commitment of $200 million was made to Centurium Capital Partners 2018, a midcap growth equity and buyout private equity fund investing in the consumer and healthcare sector in China. The fund is being raised by Centurium Capital Management and has a target of $1.5 billion and a hard cap of $1.9 billion.

WSIB commissioners approved the commitment at its Dec. 13 meeting, shows board material.

Also at the Dec. 13 meeting, the board material shows, WSIB commissioners approved investment consulting firm Pension Consulting Alliance to participate in its consulting pool for its Tangible Assets investment program. The contract of the original consultant in the pool, Hamilton Lane Advisors, was also renewed. Both contracts will be in place for an initial period of five years.

WSIB has one of the highest concentrations of private market investments of any public pension plan in the US. Together, real estate, private equity, and tangible assets make up more than 40% of the overall fund’s assets under management.

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