The Nebraska Investment Council approved a $20 million commitment to Torchlight Debt Opportunity Fund IV at its meeting Tuesday, state investment officer Jeff States told Private Debt Investor.
Torchlight Investors is targeting $1 billion for the vehicle, which will invest in debt and other interests in commercial real estate, according to May documents from a Los Angeles City Employees' Retirement System meeting. The firm will invest in CMBS, mezzanine debt, B-notes, preferred notes and financing for distressed mortgages.
“This approach gives diversification to the portfolio and allows flexibility should one area of focus become less attractive from a risk/return standpoint,” a LACERS memo says.
Because of previous commitments to Torchlight, LACERS was able to wrangle a 25 basis point break on fees, resulting in a 1.25 percent management fee on committed capital. The fund also has a 9 percent preferred return with a 50/50 catch-up until the GP receives 20 percent of total distributions, with distributions being distributed on a 80 percent/20 percent split with LPs thereafter. LACERS approved a $25 million commitment to the fund, according to May meeting minutes.
“As of March 31, 2013, Fund II, a 2007 vintage year fund, and Fund III, a 2009 vintage year fund, had projected net equity multiple ranges of 1.00x – 1.10x and 1.80x – 1.95x, respectively,” according to LACERS.
The fund held a first close on $300 million in September 2012, according to a report from sister publication PERE. A US Securities and Exchange Commission filing lists chief executive officer Daniel Heflin and managing director Trevor Rozowsky as executive officers of the fund.
Torchlight was founded in 1995 and had acquired more than $20 billion in commercial real estate debt since its inception. The firm has $3 billion in assets under management.
Nebraska manages the investments of 30 state entities, including the benefit plans of school, state patrol and judge employees as well as the State and County Retirement Plans and State Deferred Compensation Plan. The Investment Council had $17.8 billion under management as of December, according to its website.