US - The Connecticut Retirement Plans and Trust Funds will be investing $350m (€284m) into real estate in 2012, beginning with a $100m commitment to the Cornerstone Patriot fund.

Denise Nappier, treasurer for the State of Connecticut, said the pension fund had increased its targeted allocation to real estate from 5% to 7%. 

The increase will mean the scheme has around $500m of new capital that could be invested in the asset class in the longer term.

Connecticut will be considering two kinds of strategies for the new capital. 

According to Nappier, the scheme will consider core real estate and/or income-producing strategies, as well as existing managers with follow-on funds.

Connecticut cited several reasons for selecting the Patriot fund, including the benefit of geographic diversification versus other investments in its core real estate portfolio.

It also pointed out the Patriot's tactical overweight of apartment assets and top-quartile returns, both in terms of income and appreciation on a risk-adjusted basis.

The Patriot fund is targeting a return of 7-8%, 75% of which is expected to be realised through income generation.

Connecticut made an initial $75m commitment to the Patriot, managed by Cornerstone Real Estate Advisers, in 2008. 

The core, open-ended fund has total assets of $1.8bn and invests in a portfolio of office, industrial, retail, apartments and hotels on a nationwide basis.

Connecticut holds a real estate portfolio valued at $1.2bn through the end of June 2012, and has invested 5% of its $24bn of total plan assets in the asset class.

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