UNITED STATES - New York State Common Retirement Fund has approved $450m (€308.2m) of commitments into three opportunity funds, in a bid to generate projected gross IRR of 20%.
The largest of these commitments was a $300m allocation into the Morgan Stanley Real Estate Fund VII Global commingled fund which will have a total capital raise of $10bn-$12bn.
Around 25% of the commingled fund is projected to be invested in Western Europe, and targeted in particular at Germany while the remainder will be invested in the US, Asia and in emerging markets led by China.
A wide variety of deals are being considered for Real Estate Fund VII, such as public to private transactions and investing equity in emerging markets development projects.
New York State also made commitments into two commingled funds managed by Lone Star: a $100m allocation to Lone Star Fund VI and $50m to the Lone Star Real Estate Fund - its first dedicated real estate fund.
Fund VI is a distressed debt fund which will see around 25% of its assets invested in real estate and previously attracted a $300m commitment from giant pension fund investor California State Teachers Retirement System.
Investors' anticipated returns are 25% gross IRR or 19% net IRR as deals for the commingled fund will include financially-oriented operating companies and operating companies with significant tangible assets found in markets such as the US, Germany and Japan.
The Lone Star Real Estate Fund has a goal to raise $1.5bn through the commingled fund so it is looked for assets in all the main property types which provide a variety of investment strategies, including reposition or redevelopment.