Oregon Public Employees Retirement Fund (PERF) has approved a $250m (€211.5m) commitment to AEW Essential Housing Fund, an open-ended fund that invests in properties that are affordable to middle- to low-income renters.

Anthony Breault, senior investment officer for the Oregon State Treasury, which oversees the investments for Oregon PERF, said: “We believe that on a nationwide basis there continues to be tremendous demand for essential housing in the US, which this fund hopes to invest in. We have been following this type of strategy over the past five years.”

The fund, which is expected to have a leverage of not more than 50%, targets a 5% current income yield and a total return of 7.5% to over 8% on a long-term basis.

The fund aims to provide durable, long-term cash flow by targeting modest rent growth, lower resident turnover, and stable operating costs.

The fund’s manager AEW Capital Management declined a request for comment.

A previous version of this story misstated the AEW Essential Housing Fund’s total return target.

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