UNITED STATES - State of Connecticut Trust Funds has added to its core real estate portfolio by making a $75m (€51.2m) commitment to the Cornerstone Patriot Fund.

There is a growing feeling among some pension funds in the United States that now is the time to place some capital into core open-ended commingled funds, whereas funds have in recent years been moving out of this space.

Cap rates on core properties are now starting to move up for the first time in since 2003 so the managers of these funds expect to be buying properties over the next couple of years and achieving a slightly higher return.

State of Connecticut is the second major pension fund to place capital into the Patriot Fund in the last five months, as Pennsylvania Public School Employees Retirement System made a $100m allocation to the fund last September.

Cornerstone's Patriot Fund now has total assets in the fund of $1.1bn, to invest in office, industrial, retail, apartments and hotels, and is one of the few core open-ended fund managers which invests in hotels.

That said, the company has a long history of producing solid returns via hotel investments in its closed-end commingled funds and separate accounts for its pension fund clients.

Cornerstone has not set specific limits for any of the property types in the Patriot fund but is looking for stabilised and well-leased assets for the most part. It is also looking for some non-core assets on a limited basis, and will consider properties that are in need of a lease-up, redevelopment or repositioning.

Cornerstone prefers properties that are in ‘in-fill' locations in barrier markets. The company defines barrier markets as those where substantial development is unlikely because of political or physical limitations.

The real estate manager is planning to put together a diverse portfolio of assets across the major metropolitan areas of the United States.