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JUNEAU, AK-The State of Michigan Retirement System is selling half of its 91% stake in Simpson Housing LP to Alaska Permanent Fund Corp. The transaction, scheduled to close later this quarter, values the Denver-based private apartment developer and manager at $2 billion.

Simpson is among the largest private developers, owners, and managers of multifamily housing in the nation. The company operates in 34 states and currently owns 19,241 units in 63 communities and has another 2,000 units in the development pipeline.

The Alaska Permanent Fund was created in the 1970s to safeguard 25% of the state's income from its oil reserves for future generations. As part of that goal, the state distributes a share of the earnings to every qualified Alaska resident each year.

"Real Estate is a difficult asset class to deploy money in," Burns says. "This gives us an opportunity to put money to work and provides us great diversification."

Earlier this month, the Alaska Permanent Fund Corp. reached a new milestone, closing on Jan. 4 with an un-audited value of just over $33 billion. The asset allocation of the fund is 55% stocks, 32% bonds, 10% real estate, 2% private equity and 1% absolute return.

Alaska Permanent Fund chief executive Mike Burns tells GlobeSt.com the acquisition will cause the fund to be temporarily overweight on real estate, "but we will be pairing back [REIT] holdings somewhat, and there are properties that may be sold."

Despite the sale to Alaska Permanent Fund, the State of Michigan Retirement System may ultimately end up with a greater percentage of Simpson because it must make the same sale offer to shareholders of the remaining 9% of the company. Regardless, Burns says "our governance agreements say we are equal partners."

Deutsche Bank Securities Inc. acted as sole financial advisor to the State of Michigan Retirement System and Simpson. McGuireWoods LLP provided legal advice and PricewaterhouseCoopers provided consulting services. CS Capital Management Inc. acted as advisor to Alaska Permanent Fund and Heller Ehrman LLP provided legal advice.

Instant Insights /

Recapitalization Values Simpson Housing at $2B

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