The Florida State Board of Administration (Florida SBA) is backing opportunistic strategies managed by Cerberus and Colony Capital.
The US pension approved $350m (€320.8m) in new commitments to Cerberus Institutional Real Estate Partners IV and Colony Distressed Credit & Special Situation IV.
The pension fund said the new commitments would allow it to maintain diversification within real estate.
Both funds will give the investor additional exposure to the European market.
Cerberus’s fund will invest half of its capital in Western Europe, while Colony Capital expects to invest approximately 60% of its capital in Europe.
The remaining capital will be invested in the US.
Cerberus is looking to raise $1.5bn for the vehicle and co-invest as much as $30m.
Partners IV will invest in distressed debt, including non-performing loans, CMBS and residential mortgage-backed securities.
Investors are projected to achieve a 17-20% gross IRR and 14-17% net IRR.
Colony Capital is aiming to raise $2.5bn for its fund.
Approximately 40% of the fund will comprise single loans or portfolios, expected to produce a 15-18% gross IRR.
Colony is looking to place 35% of the fund into high-yielding loan originations – either mortgages and mezzanine loans through high-yield debt and preferred equity.
Returns are expected to be around 12-18% gross IRR.
The balance of the fund will target special situations, including rescue capital, recapitalisations and equity investments.
Florida SBA’s real estate portfolio was valued at $12.6bn, as of November last year.
The portfolio makes up 8.8% of its total plan assets.
The scheme’s targeted allocation for real estate is 10%.
