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Newsmakers

ADIA Pursues Goldman Sachs Hotel Portfolio

The Abu Dhabi Investment Authority (ADIA) is investing $475 million in Goldman Sachs' hotel portfolio.

(May 27, 2011) — Abu Dhabi’s sovereign wealth fund is investing $475 million in a Goldman Sachs hotel portfolio, the Wall Street Journal is reporting.

The deal is part of a broader restructuring for Goldman Sachs’ Whitehall Real Estate Funds, which is one of the banking giant’s largest hotel portfolios. Deutsche Bank will also refinance the debt through a $975 million loan.

The purchase by the sovereign wealth fund reflects renewed confidence in real estate investments and heightened faith in a rebound in travel demand following the recession.

Similarly, in February, the Government of Singapore Investment Corp.offered to pay $1.5 billion to purchase five resorts that include Grand Wailea Resort Hotel & Spa in Maui, Hawaii, and the Doral Golf Resort & Spa in Miami. The resorts filed for bankruptcy on February 1.

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Other institutional investors have also revealed flocking to property in anticipation of a rebound. On Thursday, the $108 billion Teacher Retirement System of Texas (TRS) awarded LaSalle Investment Management a second $200 million mandate to invest in property around the world. Earlier this year, the head of one of Canada’s most active global investors said that it is eyeing US commercial property. David Denison, chief executive of the Canada Pension Plan Investment Board (CPPIB), which oversees $140 billion in assets for Canada’s national pension plan, told the Wall Street Journal that he has witnessed a spike in the availability of commercial real estate in the US, and that he is expecting that trend to continue.

Additionally, the California Public Employees’ Retirement System (CalPERS) reported that it is expected to revamp its $15.4 billion real estate portfolio, targeting mainly domestic, core or stable income-producing real estate, run by managers in separate accounts. The $226 billion fund reported that it is looking to allocate around $2 billion to real estate deals in 2011 with a new strategy of more reasonable returns after its real-estate portfolio lost nearly half of its value — more than $10 billion — from July 2008 to June 2009. The move reflects a trend among funds to pursue real estate more conservatively after dismal property returns in recent years.



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742
Home > News > Regulation > Houston Pension Sues Highland, JP Morgan
Regulation

Houston Pension Sues Highland, JP Morgan

A Houston pension plan has sued Highland Capital Management, the debt manager with about $22 billion in assets under management, and JPMorgan Chase & Co. over claims that willful looting led to the shutdown of the Highland Crusader Fund.

(May 27, 2011) — The $1.9 billion Houston Municipal Employees Pension System has sued hedge fund operator Highland Capital Management and JPMorgan Chase over the shut Crusader fund, which was set up to invest in distressed corporate debt.

The suit, filed earlier this week in Delaware Chancery court, alleges that Dallas-based Highland, the largest hedge fund manager in Texas with about $22 billion in assets under management, and the Crusader Fund failed to guard investors while it collapsed, freezing investor withdrawals while protecting its own hedge fund network.

Highland co-founders James Dondero and Mark Okada caused the Crusader Fund to engage in “dozens of self-interested transactions,” the Houston Municipal Employees Pension System said in the complaint obtained by Bloomberg. The pension fund claims that Crusader engaged in at least 56 deals with other Highland funds that hurt investors in the fund. The scheme, which invested $15 million in the fund, is seeking unspecified losses caused by the alleged wrongdoing.

The Crusader Fund “was harmed by virtue of being stuck with poor quality assets that it would not have had if the partnership had been managed in the best interests of the partnership and its limited partners,” lawyers for the pension plan said in the complaint filed in Delaware Chancery Court.

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In response to the lawsuit from the Houston Municipal Employees Pension System, Highland issued the following response:

“In our view, this suit represents a single plaintiff’s law firm attempting to create financial leverage for one party’s benefit at the expense of all other investors and derail the investor-led mediation process that is substantially complete. In fact, this same law firm tried to derail the successful, investor-driven process that led to the recent, equitable resolution for the Highland Credit Strategies hedge fund. Similarly, we do not expect this meritless suit to impede the approval of a final plan of distribution for Crusader in the coming weeks.”



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

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