UNITED STATES – Iowa Public Employees Retirement System plans to commit $150m (€115m) to Blackstone's latest global property debt fund and will provide another $50m to Principal Real Estate Investors if the company can raise $250m by the middle of the year.
The US pension fund is seeking to allocate $200m in capital to real estate debt strategies. It chose Blackstone and Principal's strategies from a final shortlist of debt funds that included Oaktree Real Estate Opportunities Fund VI and Torchlight Investor Debt Opportunity Fund IV.
Iowa PERS will commit $150m to Blackstone Real Estate Debt Strategies II, which is aiming to raise more than $2bn in total, but the pension fund will only release $50m to Principal if the manager is able to raise at least five times that amount by the end of June.
In the event that Principal is unable to meet the target, Iowa PERS will revaluate the commitment and, if necessary, consider alternative debt funds.
Both funds managed by Blackstone and Principal will invest in real estate debt in the US, although the former has a more global remit and can allocate up to a third of its investments to Europe.
Iowa PERS is expecting to achieve returns of 8% to 12% from the investments.
Blackstone's second real estate debt fund will invest in a variety of debt structures such as mezzanine debt, whole loans, CMBS and preferred equity.
Principal's strategy is to originate, acquire, manage and exit private commercial real estate debt investments focused on the office, industrial, retail and apartment sectors.