Connecticut Retirement Plans and Trust Funds is considering a $50m (€45.4m) commitment to Gerding Edlen’s Green Cities III fund, according to a board-meeting document.
A final decision on the investment has yet to be made.
Connecticut was looking to find additional value-add funds in which to invest.
The pension fund has a value-add portfolio valued at $350m, representing 17% of its total real estate portfolio, and a sub-allocation for value-add real estate of 25% of the same portfolio.
Green Cities III will acquire urban properties located in high-growth markets in the US, with all assets expected to be LEED Certified Gold or Platinum.
Office and apartment assets are being targeted, with investment in the former including A and B-grade assets that are under-managed or have leasing issues.
A portion of apartment deals will include sites for future development.
Green Cities III is already over-subscribed.
Connecticut said in a board-meeting document that it had raised $365m, above its original $350m targeted capital raise, planned for this month.
Gerding Edlen is co-investing $4m in the fund.
Limited partners are projected to achieve net IRRs of 14%, with 60% leverage on the total cost of acquisition/retro fit and a maximum 70% leverage on any one asset.
Connecticut believes Gerding Edlen has been a strong performer in its previous funds.
In 2014, the pension fund committed $30m to Gerding Edlen Green Cities II.
The fund delivered an 18.9% net IRR as of June this year, putting the fund in the first quartile of its peer universe.
