The New Mexico State Investment Council (SIC) has announced significant new commitments totaling $781 million (€670 million). These investments target both real estate and infrastructure, marking a strategic allocation of capital by the sovereign wealth fund. The move includes substantial commitments to Carlyle's property fund and CVC DIF's infrastructure strategies.
Key Takeaways
- New Mexico SIC committed $781 million (€670 million) in total.
- $200 million went to Carlyle Property Investors, focusing on US real estate.
- €400 million was allocated to CVC DIF's core-plus and value-add infrastructure funds.
- An additional €200 million is earmarked for co-investments across the infrastructure funds.
- These investments represent a new relationship with CVC DIF for infrastructure.
Carlyle Property Fund Sees Increased Commitment
The New Mexico SIC has deepened its investment in the Carlyle Property Investors fund. An additional $200 million commitment has been made to the open-ended fund. This follows an initial $100 million investment in 2019, bringing the total allocation to Carlyle Property Investors to $300 million.
The Carlyle fund primarily focuses on acquiring existing US real estate assets. Its target sectors include senior housing, self-storage, and single-family rentals. This strategy aims for stable, long-term returns from established properties across the country.
Carlyle Fund Allocation Snapshot
- Manufactured Housing: 32%
- Single-Family Rental: 25%
- Medical Office: 10%
- Active Adult Residential Communities: 8%
Real Estate Focus and Future Prospects
As of the first half of the year, the fund's portfolio shows a strong weighting towards manufactured housing at 32% and single-family rentals at 25%. It also maintains exposure in medical offices at 10% and active adult residential communities at 8%. While the main strategy involves acquiring existing assets, the fund retains the flexibility to allocate up to 10% towards development deals, allowing for growth opportunities.
First-Time Partnership with CVC DIF for Infrastructure
In a notable new development, the New Mexico SIC has established a first-time relationship with CVC DIF. The sovereign wealth fund committed a total of €600 million to CVC DIF's infrastructure strategies. This includes a €100 million commitment to the DIF VIII core-plus fund and a €200 million investment in DIFVA IV, a value-add fund.
Additionally, the New Mexico SIC has allocated another €200 million for co-investments. These co-investments are designed to participate across both the core-plus and value-add infrastructure funds, providing diversified exposure to the sector.
"These strategic investments reflect our commitment to diversifying our portfolio and securing long-term returns for the state of New Mexico," a spokesperson for the SIC stated, highlighting the importance of these new partnerships.
Global Reach of Infrastructure Investments
The DIF VIII core-plus fund plans to distribute its capital globally, with 55% allocated to Europe and 45% to North America. This fund will target a diverse mix of infrastructure sectors including transport, energy transition, digital infrastructure, healthcare, and utilities. This broad approach aims to capture growth across various essential services.
Understanding Core-Plus and Value-Add Infrastructure
Core-plus funds typically invest in stable, operational infrastructure assets that offer predictable cash flows but may have some potential for value creation through operational improvements or modest development. Value-add funds, on the other hand, target assets that require more significant active management, redevelopment, or greenfield development to enhance their value and generate higher returns.
The DIF VA IV value-add fund focuses on both acquisitions and greenfield development. Its investment sectors mirror those of DIF VIII, including digital infrastructure, energy transition projects, transportation, and healthcare. This dual approach allows for both acquiring existing assets and developing new ones, capitalizing on emerging needs in critical infrastructure.
Strategic Portfolio Diversification
These latest commitments underscore the New Mexico SIC's strategy to diversify its investment portfolio across various asset classes and geographies. By investing in both US-focused real estate and global infrastructure, the fund aims to mitigate risks and enhance returns. The allocation to different types of residential and essential service infrastructure reflects a balanced approach to long-term wealth management.
The move into infrastructure with CVC DIF represents a significant expansion for the SIC. It broadens their exposure to sectors critical for economic development and societal well-being. This diversification is crucial for sovereign wealth funds seeking stable growth in a dynamic global market.
- The total commitment is equivalent to approximately $781 million USD.
- The real estate fund targets specific US housing segments.
- Infrastructure funds will invest in both Europe and North America.
- Sectors include energy transition, digital, and healthcare.
The State Investment Council manages the state's permanent funds, investing for the benefit of current and future generations of New Mexicans. These new allocations are expected to contribute to the fund's overall performance and stability.
