NORTH AMERICA – The New Mexico State Investment Council has approved new real estate commitments totalling $175m (€134.5m).
The pension fund invested $75m into the USAA Eagle Real Estate Fund and $50m each into the Cypress Acquisition Partners Retail Fund and the Harrison Street Real Estate Fund IV.
Vince Smith, deputy investment officer at New Mexico State, said: "We view these three funds as placing capital into sectors of our real estate portfolio we are looking to fill. The Eagle Fund has a core-plus strategy. Cypress is a retail-oriented investment fund. Harrison invests in niche property types that many other institutional real estate managers don't pursue on a regular basis."
USAA Real Estate has seeded the Eagle Fund with a variety of property types across the US, including existing and to be developed apartments in San Francisco, Los Angeles, Houston and Maryland, and grocery-anchored retail in Illinois, Indiana, Missouri and Tennessee.
The real estate manager will be making a co-investment of 10% of the open-ended fund or as much as $100m.
Cypress Real Estate Partners will be investing in retail properties in the US with a value-creation opportunity.
The targeted capital raise is $300m.
According to a New Mexico document, the targeted gross leveraged IRR is 17%, with around 7% average current return distributed to investors.
Harrison Street Real Estate Capital has a $700m hard cap for Fund IV.
A final close is projected for some time in the second quarter.
Investors in the fund are projected to achieve a blended IRR in the 16-17% range after fees.
Property types will include student and senior housing, medical office and self-storage.
New Mexico will be looking to invest more capital in real estate for this year.
Smith said: "We are most likely done with core. We will be looking at some value-add and overseas strategies.
"This would include considering some investing in commingled funds with a European strategy."