New Mexico State Investment Council is to invest $75m (€55m) in the latest real estate debt fund run by Brookfield Asset Management.
The US institutional investor has approved a commitment to the Brookfield Real Estate Finance Fund IV. Brookfield is seeking to raise $850m in total for the US debt strategy.
Brookfield will take a number of approaches: originating whole loans and either selling or syndicating senior positions to third parties; providing mezzanine loans or preferred equity alongside existing senior debt; recapitalising properties for tenant improvements and leasing costs.
Vince Smith, deputy investment officer for New Mexico, said: “One of the big attractions to this investment fund is that we are projected to achieve a 13% net IRR for this commitment. We think this is a very strong return.
“We also believe that there is a need for more new debt originations in the marketplace on a domestic basis.”
According to board meeting documents, 80% of the fund’s capital is likely to be invested in office, retail, industrial and apartment assets. The balance will be invested in hotels and niche property types.
Earlier this year, New Mexico State Investment Council revealed it would allocate $330m of capital to real estate over the subsequent 18 months, of which $160m would be invested in value-added and opportunistic strategies.