BlackRock is looking to raise $750m (€682m) for its latest US real estate debt fund, Carbon Capital VI.
The Florida State Board of Administration is backing the fund with a $150m commitment.
Florida SBA’s commitment will cover 20% of the fund’s targeted $750m capital raise.
Carbon Capital VI is targeting an 8-10% net return and 10-12% gross IIR, with returns coming mainly from current income.
All of the fund’s capital will be invested in US primary and secondary markets.
A large percentage of the fund will be invested in office, industrial, retail and apartment assets.
Carbon Capital VI will focus on acquiring and/or originating performing subordinate debt and first mortgage bridge financing that is secured by high-quality stabilised commercial assets.
The subordinate debt will be loans that fall in at the mezzanine layer of the capital stack.
Florida SBA believes now is a good time to be investing capital in real estate debt.
“There are numerous factors that make real estate lending attractive today,” the pension fund said.
“These include a significant amount of maturities coming due in 2015-17, regulatory restrictions and punitive charges on bank lending, new CMBS risk-retention rules impacting supply and demand, a lack of traditional bank lenders in US real estate markets today, with macro-volatility impacting high-yield and the CMBS market.”
It added: “The SBA has a long-standing relationship with the BlackRock Carbon Capital team and believes they have done a good job investing in the space across multiple market cycles.”