The Pennsylvania Public School Employees’ Retirement System (PSERS) has invested $100m (€80.7m) in a new property fund set up by Cabot Properties.
The new vehicle is to target core industrial assets in the US.
According to PSERS’ real estate consultant, Courtland Partners, Cabot Industrial Core Fund II is targeting net returns of 8-10% a year, with anticipated initial current yields of 5-6%.
Around 70-80% of the return is expected to come from current income, with the balance resulting from appreciation driven by the growth in income, the consultant said in a meeting document.
PSERS invested $150m into Cabot’s first core fund, which raised $443m when it closed in 2016.
This investment produced a net internal rate of return of 10.9% as of the end of September 2017.
The Cabot Industrial Core Fund II will focus on properties located in the manager’s target markets where there is growing demand and scarcity of value, including Los Angeles, South Florida, San Francisco, Chicago, New York and New Jersey.