The New York State Common Retirement Fund is investing in two European real estate funds managed by Ares Management and NIAM.
The US pension fund is investing $559m (€613m) with the two managers.
It committed $450m to the Ares European Property Enhancement Partners II fund and $100m to the Niam Nordic VI fund.
The pension fund highlighted the strong fundamentals for European value-add strategies, citing improving macroeconomic changes and favourable real estate trends.
New York Common sees an opportunity to take advantage of strong deal flow from banks and institutions deleveraging, as well as a growing positive gap between property yields and financing costs.
The commitment to Nordic VI is New York Common’s first investment with Niam.
The fund is seeking a €500m capital raise with a hard cap of €800m.
It will focus on Denmark, Finland, Norway and Sweden with an opportunistic investment strategy for both commercial and residential properties.
The commitment with Ares will be split, with $350m going directly into the fund and another $100m placed as a co-investment, to be invested at the pension fund’s discretion.
Ares Management is planning a total $600m raise for the fund, with a hard cap of $900m, according to an email from New York Common.
Targeted leveraged returns are 11-14% on a gross basis.
The fund will focus on Western and Central Europe’s most mature and liquid markets, including the UK, Germany and France.
Favoured property types include retail, office, residential and industrial.
New York Common has also committed $500m to US real estate via Blackstone Property Partners.
The pension fund wrote in an email that it liked BPP’s strategy to acquire stabilised, high-quality assets, taking advantage of Blackstone’s ability to source large, complicated transactions, where the seller is often less driven by price and more by speed and certainty of closing.
