Arizona State Retirement System is to invest in Blackstone’s new core-plus real estate fund.
The pension fund approved the $100m commitment to Blackstone Property Partners, as well as a $50m commitment to the Related Companies’ Energy Housing Fund.
Arizona is the second major US institutional investor to place capital with Blackstone Property Partners, following a $100m commitment last month by the Texas Permanent School Fund.
Blackstone, which is looking at a $1bn initial capital raise for the fund, will co-invest $75m of its own capital.
The open-ended fund, will invest in larger properties and portfolios. US office, industrial, retail apartments are being targeted by the fund, which is projected to achieve between 9% and 11% returns and be leveraged at 50%.
Arizona said Related’s Energy Housing Fund will invest in residential properties – primarily apartments – in areas of energy development and tight housing conditions. The pension fund will classify the investment as a niche and tactical investment within its real estate portfolio.
The fund will invest in US apartments as well as new developments, focusing on deals in Texas and North Dakota for their links to the energy sector.
Arizona’s commitments are part of $500m of capital allocated for real estate in 2014. The capital will be split into $150m for core and $350m for niche and tactical opportunities.
The pension fund said it is also conducting due diligence on two more potential investments: a joint venture with Red Mill Capital to invest in US retail, and a co-investment with the CIM Group on a New York residential and retail project.
