Berkshire Group is planning to raise $1bn (€892.8m) to invest alongside its US residential debt fund, according to an investor.

New Mexico State Investment Council (SIC) told IPE Real Assets that it has approved a $50m commitment to the Berkshire Bridge Loan Investors II-A fund.

New Mexico SIC’s commitment to the co-investment vehicle follows a $40m investment the sovereign wealth fund placed into the main fund, Bridge Loan Investors II, in February.

The co-investment fund expects to originate floating-rate first mortgage loans that have a one- to a five-year term. It will target a net internal rate of return of around 13%.

Most of the investments will be focused on older vintage Class B or newly built Class A multi-family assets as well as some senior/student housing and manufactured housing properties.

Berkshire expects to begin capital raising for Bridge Loan Investors III next year.

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