Teachers’ Retirement System of Louisiana and Connecticut Retirement Plan and Trust Funds are investing in a value-add real estate fund managed by Crow Holdings.
The two US pension funds are considering $150m (€134m) of commitments to Crow Holdings Realty Partners’ VII.
Connecticut is considering a $100m commitment to the fund, while Teachers’ Retirement System of Louisiana has approved a $50m commitment.
The former said it was a good time to place capital in value-add real estate.
In a board meeting document, the fund said that the real estate cycle is such that investments in value-add strategies are timely, with core pricing at pre-2007 levels. Value-add investments offer premium returns at relatively low additional risk levels, it said.
Dallas-based Crow Holdings is co-investing $100m in the US-focused fund and is aiming to raise a total of $1.6bn. Connecticut said fund VII had attracted $833m of commitments from investors by June.
Realty Partners VII is targeting an 11% net IRR. The loan-to-value ratio on assets in the fund is projected to be 65%.
Connecticut has invested $196.5m in value-add real estate, accounting for 1.5% of its total real estate portfolio. Value-add real estate should be in the range of 15% to 35%, the fund said.
Crow is targeting core and non-core properties, including medical office buildings, hotels and gas station assets.
The fund will invest equity and debt in both existing properties that can be improved as well as new developments or properties under development.
Louisiana Teachers has also approved a $75m allocation to Colony Capital’s Distressed Credit Fund IV.
Colony Capital is looking at a $2.5bn capital raise for the fund. According to Louisiana Teachers pension fund document, around 60% of Fund IV will be invested in Europe.
The fund will buy commercial real estate loans and real estate operating assets from distressed owners.