The Public Employees Retirement Association of New Mexico is investing $70m (€63.4m) in a fund managed by PW Real Assets, formerly Perella Weinberg.
The US pension fund is backing PW’s Real Estate Fund III, which focuses on the UK, Germany, France and Spain.
Joaquin Lujan, portfolio manager for the pension fund, said: “We were looking to get some new diversification for our real estate portfolio in Europe.
“Fund III has more of a strategy of investing in single assets than in portfolios, which is what we were seeking.”
New Mexico PERA last invested in a Europe-only real estate in 2008 when it committed $25m to Blackstone Real Estate Partners Europe III. In 2013, it invested in a European real estate debt fund managed by DRC Capital.
Deals for PW’s fund could also be found in Portugal, Ireland and some parts of Central and Eastern Europe.
The planned capital raise for the fund will not exceed €1.5bn, with limited partners projected to achieve a 15% net IRR.
Most transactions will include direct assets and corporate investments, as well as real estate credit.
New Mexico PERA is also looking to allocate up to $50m to the Madison Realty Capital’s Debt Fund III.
“We like that the manager of this fund has a very entrepreneurial investment strategy in the debt space,” Lujan said.
Fund III will be approximately 50% invested in the New York City/Tri-State region along the East Coast, with all major property types considered.
New Mexico PERA will join Oregon Public Employees Retirement Fund and the New York State Teachers Retirement System in the fund.
Limited partners are anticipated to achieve a 16% net IRR.
Madison Realty is co-investing $5m in the fund.
Origination and acquisition of senior-secured loans, bridge loans, mezzanine debt and preferred equity will be the fund’s main focus, with loans having a 1-3 year duration.
