Florida SBA pours $600m into credit mandates

The US pension fund has invested in real estate debt funds with Cerberus and Colony, as well as a credit hedge fund with Benefit Street Partners and a special situations fund with Atalaya Capital Management.  

The Florida State Board of Administration (SBA) has committed $600 million to four credit funds in the fourth quarter, according to a recently released transaction report.

Within real estate debt, the $171 billion pension plan invested $200 million in the Cerberus Institutional Real Estate Partners IV fund and $150 million in the Colony Distressed Credit and Special Situations Fund (CDCF) IV. Its other credit mandates went to the Benefit Street Partners Credit Alpha fund at $150 million and the Atalaya Special Opportunities Fund VI at $100 million.

Cerberus Capital Management’s fourth opportunistic fund is expected to reach a final close on its $2 billion hard-cap this quarter or early next, according to PDI sister title PERE. SBA had also invested $150 million in the predecessor fund. Cerberus focuses on complex or distressed debt and equity real estate transactions where competition is limited. The fund will target gross returns between 17 percent and 20 percent. Roughly half of the capital will be allocated to the US while the remainder will be deployed in Western Europe.

Colony Capital is raising $2.5 billion for its fourth distressed and special sits real estate fund. SBA had also invested $150 million in the third fund and $75 million in the second one. Similar to its predecessors, CDCF IV will focus on loan acquisitions, high-yield originations and special situations. However, compared with CDCF III, the new fund has a larger allocation to Europe, with a 60 percent allocation target to the region, compared with 40 percent for CDCF III, according to PERE

Benefit Street’s credit alpha fund is a long/short liquid credit hedge fund. The New York-based firm, which is the credit arm of Providence Equity Partners, also manages private equity-style closed-end funds, collateralized loan obligations (CLOs), debt-focused separate accounts and is growing a business development company (BDC).

Atalaya’s Capital Management’s sixth special situations fund has so far collected about $463 million since being launched last year, according to PDI Research & Analytics. New York-based Atalaya beat its $500 million target for its fifth fund by $75 million in 2013. Atalaya invests in sub and non-performing loans secured by small and mid-market companies across a range of industries. The firm is also capable of structuring and originating financing in the form of term loans, revolvers, debtor-in-possession (DIP) financing, senior secured and subordinated capital. 

 

Additional reporting by Meghan Morris.