GLOBAL - The Maine Public Employees Retirement System has agreed to commit $75m (€56.4m) for the H/2 Credit Partners LP.
Pension fund officials said real estate debt funds could achieve solid risk-adjusted returns and that there was strong demand for debt to re-finance existing properties and fund the acquisition of properties.
H/2 Capital Partners is the manager of the Credit Partners commingled fund, which places capital into a variety of debt products like first mortgage loans and commercial mortgage-backed securities.
Maine PERS has now received board approval on two new debt real estate funds over the past few months. The other approval was for a $75m commitment to the Prima Mortgage Investment Trust last October.
Through the end of 2010, Maine PERS had a real estate portfolio valued at $368m, including a real estate securities index fund and four open-ended commingled funds managed by JP Morgan Asset Management, BlackRock Realty, Principal Real Estate Investors and Pramerica Real Estate Investors.
The pension fund now has invested 3.7% of approximately $10bn of total plan assets in real estate, with a 10% targeted allocation for the asset class.
Maine PERS has a goal of being able to reach the allocation over the next three to five years. The potential investment strategies include value-added and opportunistic through a commingled fund structure.