New Jersey Division of Investment (DOI)  is proposing to invest $200m (€189.4m) in Cerberus Capital Management’s latest global opportunistic real estate fund, the pension fund disclosed in a meeting document.

The pension fund expects to commit the capital to Cerberus Institutional Real Estate Partners VI, a fund with a $3bn target capital raise and a hard cap of $3.5bn. 

New Jersey DOI believes the investment will allow it to capitalise on credit dislocation to earn near-equity returns through senior positions in the capital stack. The fund is targeting gross returns of 17% to 20%.

New Jersey DOI believes Partners VI will give the pension fund two layers of diversification. The first layer is through investments in non-performing loans, which are not a focus of the pension fund’s other real estate managers. The second layer is that the fund manager’s focus is on some of the pension fund’s high-conviction sectors like industrial and multifamily, as well as alternative property types such as cold storage and outdoor industrial storage.

According to New Jersey DOI, Cerberus has performed well in periods of market dislocation. The manager’s second fund in the series, which existed during the global financial crisis in 2008, generated a 17.6% net internal rate of return. Partners V, the predecessor fund in the series, was formed during the start of the COVID-19 crisis in 2020 and is performing on target with net returns of 16.5%.

Cerberus Real Estate did not respond to a request for comment.

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