Notes from the Investment Committee meeting on Oct. 23
Portfolio value:The OP&F portfolio was valued at $15.75 billion as of 10/23.
OP&F commits up to $60 million with RE fund Exeter V
The Board approved a recommendation from its real estate consultant, Townsend, to commit up to $60 million to Exeter Industrial Value Fund V. Exeter Industrial Value Fund V is a value-added, closed-end fund specializing in warehouse and light industrial properties mostly in the U.S. OP&F also invested in Exeter Industrial Value Fund II, III and IV.
This is the second real estate commitment in 2019 for OP&F. Commitments now total $110 million for the year, just short of the target for 2019, which is between $120 and $170 million. The real estate portfolio is valued at $1.78 billion, or 11.3 percent of the total portfolio. The target for real estate is 12 percent.
Up to $50 million committed to private credit fund
The Board approved staff’s and Wilshire’s recommendation to commit up to $50 million to Annaly Credit Opportunities Fund, LP. The fund will target middle market lending opportunities with a preference for stable industries. OP&F’s private credit asset class is valued at $372 million, or 2.4 percent of the total portfolio. The target for private credit is 5.0 percent.
Commitment adds to OP&F’s private markets portfolio
The Board approved staff’s and private markets consultant, TorreyCove’s, recommendation to commit up to $20 million to Odyssey Investment Partners VI, LP. Odyssey Investment Partners VI will target middle market companies with a focus on the industrial and business services sectors, primarily in North America.
This is the sixth commitment in 2019 to the private markets portfolio, totaling $118 million (the target for 2019 was $120 million). The total private markets portfolio is valued at $1.33 billion, or 8.4 percent of the total portfolio. The target for private markets is 8.0 Percent.
The Board approves private markets Co-Investment proposal
The Board approved staff’s recommendation to establish a co-investment program involving future private equity and potentially private debt opportunities.
Following an education presentation on co-investing in May, TorreyCove and OP&F staff worked to create an efficient, workable process and structure for the pursuit of private equity and potentially private debt co-investment opportunities. This strategy will be in addition to current and future commitments to private markets and private debt investment funds.
No timetable has been set for the initial co-investment opportunity. Co-investments can average down overall program costs, provide greater control over the pace of investment as well as geographical, industry and capital structure exposure, and offer the potential to enhance returns through proper deal selection.
Board downgrades Franklin Templeton due to performance
Franklin Templeton Investments, which manages an international small cap mandate for OP&F valued at $314 million, has been downgraded in its latest manager rating reviews. The reason for the downgrade is performance related. Franklin Templeton will now be reviewed quarterly to re-evaluate its performance moving forward. Franklin Templeton has managed investments for OP&F since 2012.