The Highland County Council pension fund is creating a new, 4% allocation to commercial real estate debt.
The UK pension fund is inviting tenders for the strategy, according to documents filed with the EU.
The council’s intention is to appoint a single investment manager to manage around £55m (€70.8m) for the mandate.
Last year, the pension fund considered the strategy and agreed that the best option was to invest in a dedicated property debt fund.
A pooled vehicle, it decided, would need to focus “exclusively, or primarily, on UK property debt”.
Discretion to invest to a limited level in other regions, such as Western European countries, was also part of the pension fund’s criteria.
Highland said it preferred a property debt fund focused primarily on whole loans, but with discretion to invest to a limited level in the wider spectrum of loans, such as senior debt and mezzanine debt.
In minutes from a meeting last August, Highland said property debt had the “characteristics of fixed income”.
The investment will, it added, be funded mainly from gilts (2.5%) with the balance (1.5%) anticipated to be funded from equities.