Sares Regis has exceeded a $500m (€484.3m) fundraising target for its latest value-add US multifamily fund, according to a potential investor.

The San Diego City Employees’ Retirement System (SDCERS), which is planning to make a $25m commitment to Sares Regis Multifamily Value-Add Fund IV, disclosed in a meeting document that the fund has already raised $522m from investors.

The commitment by SDCERS is the first of $100m the pension intends to invest in non-core real estate funds in the current fiscal 2023 financial year which started in July.

According to SDCERS, backing the Sares Regis fund would help the pension fund improve its underweight to non-core real estate allocation from 27.3% to 29.1%. The non-core target weighting is 30%.

The Sares Regis fund will be investing in existing assets with no development transactions. It will acquire, renovate and enhance Class B multifamily properties in rapidly growing, supply-constrained submarkets in both the west and southwest regions.

The fund targets a gross internal rate of return of 13% to 16% with aggregate leverage capped at 65% loan-to-value.

Sares Regis has contributed a co-investment of up to $10m or 1.5% of the fund’s total commitments.

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