The Oregon Public Employees Retirement Fund is investing $300m (€268.4m) in Lone Star’s Real Estate Fund V.
The fund, for which Lone Star is aiming to raise $5bn, will be 75% weighted towards Europe.
Tony Breault, senior investment officer for real estate at the Oregon Investment Council, said: “We are glad the fund will have that exposure to Europe.
“We currently have 12% of our real estate portfolio in Europe, and we would like to grow this in the future.”
Breault said that, on a long-term basis, Oregon PERF had a targeted allocation of 50% for international real estate.
“It will take us a long time to reach that level,” he added.
Oregon PERF sees two notable changes on Lone Star’s investment strategy from Fund IV to Fund V.
It said Lone Star was expanding its geographical scope to include all of Asia instead of focusing solely on Japan.
It will also broaden its approach to the Americas to include South America, subject to a 10% maximum exposure within Fund V.
Oregon PERF said in a board meeting that the fund represented an attractive entry point, particularly for Europe.
Since 2007, Lone Star has invested or committed $10.6bn of equity in 53 transactions throughout Europe, employing the same strategy for Fund V.
Oregon PERF wrote in a board meeting document that 20 years of realised returns across all of the Lone Star fund series had resulted in a net 19.4% IRR and a 1.5x net multiple.
As of September last year, the pension fund had an aggregate NAV exposure to Lone Star of $662m, representing 8.2% of the scheme’s total real estate portfolio.
Lone Star is co-investing $375m, with 1% from the general partner, 1% from Hudson Advisors and $250m from an entity affiliated with Lone Star founder John Grayken.