Greenoak Real Estate, which is merging with fellow real estate fund manager Bentall Kennedy, is seeking to raise $1bn (€888m) for its latest Asian fund, according to an investor.

Texas Permanent School Fund said in a board meeting report that it will invest in $75m in GreenOak Asia III and disclosed the fund manager’s fundraising target.

According to the pension fund, the new fund will target annualised returns of between 15% and 18%, and will have a focus on Japan.

Other markets being considered include Hong Kong, Singapore and South Korea.

A report by Texas Permanent’s investment consultant StepStone said Greenoak was one of the pension fund’s top performing managers.

The investment will form part of Texas Permanent’s plan to invest $850m in real estate this year, set out in its latest board meeting.

This year’s pacing plan has a higher figure for real estate compared with 2018 when the pension fund was unable to invest all of the $750m it had earmarked for the asset class.

The capital is likely to be invested in non-core funds and co-investments due to Texas Permanent being over-allocated to core real estate.

Its real estate portfolio is now split 50-50 between core and non-core investments, but its long-term target is 35% core and 65% non-core.