New Mexico ERB commits to first-time fund

The state’s Educational Retirement Board has approved a $50 million commitment to Raith Capital Partners’ new real estate debt fund.

The Santa Fe-based New Mexico Educational Retirement Board (ERB) has committed $50 million to Raith Capital Partners’ new real estate debt fund, Raith Real Estate Fund I.

Raith is seeking to raise $300 million for its first commingled fund, which targets distressed debt backed by commercial real estate. The fund will focus on unpaid municipal balances in the US in the $15 million to $75 million range, with the ability to invest some portion of its capital overseas. Raith, which is targeting a gross return of 18 percent to 20 percent, is aiming for a first close at the beginning of the fourth quarter.

New Mexico ERB made the commitment to Raith at its investment committee meeting on August 22. “We wanted to invest in distressed debt, and we believe Raith’s team is best in class,” said Mark Canavan, head of real assets at the ERB.

Raith was founded in February 2012 by Bill Landis and Nelson Hioe, former executives at Rialto Capital Management. The New York-based investment firm focuses on two primary strategies, targeting distressed loans and commercial mortgage-backed securities.

In February, the ERB revealed a four-year private real estate plan to reach its target allocation. As of April 2013, the $10.3 billion pension plan had allocated 5 percent, or $515 million, to real estate, of which $415 million was earmarked for private real estate investments. ERB’s invested capital in real estate totaled $203 million, or 48 percent of its target, in June. The ERB hopes to reach its target real estate allocation in late 2014 to early 2015 by making $205 million in commitments this year and $100 million each year in 2014, 2015 and 2016.