Kern County Employees’ Retirement Association has issued $90m (€77.3m) worth of commitments to Fortress Investment Group’s open-ended real estate debt strategy.
The pension fund disclosed in a board meeting document that it has committed $60m to the Fortress CRE Enhanced Income Fund, and contributed $30m to a seed-capital co-investment vehicle associated with the fund.
Fortress Investment is seeking an initial $2bn to $3bn in commitments for the real estate debt fund. The manager is also looking to raise $500m in seed capital.
The real estate debt fund will primarily provide commercial first mortgages, mezzanine loans, preferred equity and bridge financing, with 85% of the portfolio located in the US. The remaining capital is expected to be invested in Europe.
The fund’s favoured property types include multifamily, industrial/logistics, hospitality and retail. It may also selectively invest in some office assets.
The targeted returns for the fund are net internal rate of returns of 12% to 14% and a 10% to 12% annualised cash income yield to be paid out quarterly.
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