New Mexico Educational Retirement Board (NMERB) is to invest $70m (€56.4m) in two non-core real estate funds.
According to a board meeting report, the pension fund has approved a $40m commitment to Ram Realty Partners IV and a $30m commitment to Sares-Regis Multifamily Value-Add Fund III.
Ram Realty Partners is seeking to raise between $200m and $275m for the fund, according to sources that track fundraising in the US.
The fund will invest in value-add apartments and shopping centres in the southeast region of the US, including North and South Carolina, and Florida.
The target net internal rate for return (IRR) for the fund is 14%.
Sares-Regis is looking to raise $400m for Value-Add Fund III, which would make it its largest fund ever. It raised $304m for Fund II.
The fund will invest in value-add apartment complexes in Western US markets and is targeting a gross IRR of 14-16%.
NMERB has invested in previous funds by both managers.
According to an investment report from NMERB, RAM Realty Partners III produced a 22.3% time-weighted return over three years, and a 17.27% internal rate of return (IRR) since inception. Sares-Regis I generated a 20.26% time-weighted return over three years, and a 16.66% IRR since inception.
Mark Canavan, head of real assets at NMERB, said: “We prefer to have a limited number of managers that we invest with for our real estate portfolio. One of the reasons for this is that we have a small investment staff and really can’t work with too many.”
