UNITED STATES - Kansas Public Employees Retirement System has approved a $25m (€19.5m) commitment to the Square Mile Partners III structured finance commingled fund.

According to pension fund officials, the institutional investor feels there are going to be some strong investment opportunities in the marketplace because there is so much capital sitting on the sidelines and expected to stay that way for much of 2009.

This latest commitment is the first time Kansas PERS has made a real estate investment with Square Mile Partners. 

The pension fund considers this investment as a high-yield debt fund as it's projected to deliver ouble digit net IRRs over the life of the fund by investing in US mezzanine debt, B-notes and private equity.

Square Mile Partners is attracting a wide range of investors for its commingled fund as it has also received a $175m contribution from Teacher Retirement System of Texas, though by the end of 2008 just $21.2m of this commitment had been called by the manager.

Kansas PERS is also expected to hire outside REIT managers next week at its board meeting with the assistance of its real estate consultant, The Townsend Group, to oversee the pension fund's existing REITs portfolio.

The value of the REITs portfolio was $330m at the end of 2008, and pension fund officials say outside managers are being sought to free up the investment staff for other duties within the overall investment portfolio.

Kansas PERS has a domestic REIT strategy benchmarked to the MSCI US REIT Index.

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