The New Jersey Division of Investment has formed a $303m (€267.8m) separate account relationship with TGM Associates to invest in US apartments.

The pension fund allocated $300m for its 99% ownership of the account, in which TGM will hold $3m (1%).

The account, the pension fund’s first with TGM, will pursue a non-core strategy.

New Jersey is currently under-allocated to the apartment sector, with 16% of its portfolio invested in the property type.

Average multifamily exposure across the NCREIF-ODCE Fund Index is around 25%.

TGM’s investments in apartments for previous separate account relationships was a decisive factor for New Jersey.

A separate account for a large public fund delivered a 10.5% net IRR and a 1.9x multiple of invested capital since inception.

TGM also has worked on two corporate pension fund separate accounts, generating a 14.1% net IRR and 2.1x multiple, and a 15.5% net IRR and 1.5x multiple.

TGM, which carries out improvement works, typically renovates 3-5 occupied units per day, minimising vacancy.

The company, which owns properties in 60 cities and 28 states, uses low leverage.

One of its previous separate accounts had an average leverage of 12%.