The Los Angeles Water and Power Employees Retirement Plan, based in the United States, has made a noteworthy commitment of $75 million (€69.3 million) to Locust Point Capital’s Private Credit Fund III.
During a recent board meeting, the pension fund disclosed its strategy, allocating $65 million from its Retirement Fund and $10 million from its Retiree Health Benefits Fund to this investment. This move reflects the retirement plan’s confidence in the potential of real estate credit markets and the strategies employed by Locust Point Capital.
Understanding Locust Point Capital’s Investment Strategy
Locust Point Capital is attracting significant attention in the investment community. As of January, they reported having garnered $536.3 million in capital commitments for Private Credit Fund III, showcasing robust investor interest.
The fund aims to deliver 12-14% net internal rates of return by targeting lower middle-market value-add assets, which are often undervalued and present opportunities for growth.
Key Components of the Fund’s Focus
Locust Point Capital’s strategy revolves around providing senior and subordinated debt, alongside preferred equity for real estate transactions.
The fund specifically targets investments ranging from $2 to $10 million, with a primary focus on senior housing and care facilities. By concentrating on secondary and tertiary markets across the United States, the fund identifies areas that often present untapped opportunities for attractive returns.
Implications of the Investment
This strategic commitment by the Los Angeles Water and Power Employees Retirement Plan underscores a broader trend of institutional investors seeking stable income through real estate credit markets, reports Realestatez.
“Our investment approach emphasizes long-term performance and targeted growth,” a representative from the retirement plan remarked, reinforcing the rationale behind this decision.
The $75 million investment in Locust Point Capital’s Private Credit Fund III is a considerable step for the Los Angeles Water and Power Employees Retirement Plan, reflecting confidence in the real estate sector and its potential for attractive returns.
As the fund continues to evolve, the focus on lower middle-market assets in secondary and tertiary markets could yield promising opportunities for growth. Investors and industry watchers will undoubtedly keep an eye on these developments as they unfold.
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