Kentucky Retirement Systems (KRS) and MassMutual Life Insurance Company are joint investors in Barings Real Estate’s debut European value-add fund.

The US investors are each committing $175m (€151m) to Barings Real Estate European Value Add 1, according to KRS.

MassMutual, which owns Barings, and KRS will be the sole investors in the fund, aside from possible co-investment from Barings employees.

Barings declined a request for comment.

Andy Kiehl, director of investments for real estate at KRS, said the arrangement suited the pension fund, which is increasingly looking to create partnerships for its real estate investments.

“We want to invest with managers where we have equal footing as far as the amount of capital at risk in the relationship,” he said.

Barings’ European real estate business was created in 2009 when its parent MassMutal acquired Protego Real Estate Investors. It was merged with its existing subsidiary Cornerstone Real Estate Advisers, before being renamed Barings Real Estate in 2016.

It launched its debut European core fund last year, but it is understood that the new fund is its first value-add offering under the Barings brand.

According to KRS, the fund has already made several transactions, worth a total of $90m, in Milan, Helsinki, Munich and Paris.

Last month, IPE Real Assets also reported that Barings had acquired an office building in Madrid on behalf of a European value-add strategy.

KRS said the fund is targeting net returns of 12% to 15% by acquiring mispriced or mismanaged assets in supply-constrained markets with up to 60% of leverage across the portfolio.

It will invest in office, retail and logistics sectors.

“The real estate markets in Europe are greater than 12 months behind the markets in the US from a recovery standpoint,” said Kiehl.

“We feel good about the potential investment opportunities in Europe.”