Ares Management Corporation is seeking to raise €2.5bn for its sixth European real estate fund, according to an investor.

The New Mexico State Investment Council (SIC) told IPE Real Assets that it has approved a €100m commitment to Ares European Real Estate Fund VI as it believes the European real estate market is currently undervalued and still has room to grow.

The fund is planning to hold a first close at the end of the month. Fund VI will target platforms/portfolios, corporate and special situations and repositioning, redevelopment and selective development.

Most of the capital will be invested in residential, logistics and office assets. Fund VI will also consider some data centres, life science and self-storage assets.

Fund VI expects to low to mid-double-digit range net internal rate of return.

New Mexico SIC said it has also approved a $100m (€88.5m) commitment to the FPA Apartment Opportunity Fund VIII, according to the investor.

FPA plans to raise $1.35bn for the opportunistic US apartment fund which targets a 12% net internal rate of return.

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