The Arizona State Retirement System is to invest up to $400m (€352m) in real estate this year, according to a board meeting document.

Together with real estate consultant NEPC, the US pension fund will look to place the capital in funds and separate accounts.

Arizona State will continue to focus on niche property types and markets that receive less institutional focus, including medical office buildings, senior housing, self-storage and student housing.

It will also target apartments and industrial assets.

The investor avoids construction risk, except in the strongest locations, with supply constraints and robust tenant demand.

Arizona State said the US residential, suburban office and niche industrial property types were still in recovery phase.

It said, however, that it was uninterested in the CMBS sector, as pre-financial-crisis structures continue to work their way through the system.

The pension is aiming to be net seller of some assets during 2016.

It is looking at the potential disposition of around $300m of existing real estate investments for the year, according to a board meeting document.

NEPC has some concerns about core real estate, writing in a board meeting document that current core valuations were high and outlining the possibility of rising interest rates and the impact on cap rates.