San Diego City Employees’ Retirement System is planning to invest $70m (€50.3m) in two higher-return real estate funds.
It will commit $50m to Carlyle Realty Partners VII and $20m to CBRE Strategic Partners US Value 7.
Carlyle is seeking to raise $3bn in capital commitments from investors for its new opportunistic fund, which would make it the largest commingled vehicle run by the manager to date.
The fund is aims to take advantage of the housing recovery in the US, as well as renovation and development opportunities, and stress in property capital structures.
Realty Partners VII, which only invests in the US, focuses on single assets and equity investments of less than $50m, including the office, industrial, retail and apartment sectors. Hotels, senior living, self-storage and manufactured homes are also being considered.
CBRE Global Investors is aiming to raise $1.5bn for its value-added US Value 7 fund, and hopes to reach an initial close next month and a final close 12 months later.
CBRE Global Investors will co-invest in the fund to a value of 2% of total capital commitments but not exceeding $30m. The maximum leverage allowed for the fund is 60% of projected total portfolio cost.
The fund is aiming for a 15% gross return and 12.8% net leveraged IRR. Apartments, office, industrial, retail and hotels will be targeted by the fund.
Montana State Board of Investment, meanwhile, has approved a $25m commitment to the Stockbridge Value Fund II. Stockbridge Capital Group is aiming to raise $400m to $500m for the fund, with a final close by December.
Investors in Fund II are projected to achieve a gross return of 12% to 15% and a net IRR of 10.4% to 13%. Returns are to be be split evenly between income and appreciation.
The fund will invest in the US West Coast, East Coast and Sunbelt regions. Stockbridge will buy properties it believes are undervalued, under-used or not operating to full potential. Targeted property types range from office and industrial to the retail and apartment sectors.
Montana has invested with Stockbridge in the past, having invested the same amount in the initial Stockbridge Value Fund in 2012.
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