New York State Common Retirement Fund (NYSCRF) has approved a $225m (€198m) commitment to ARA Asset Management’s latest Asia-focused property fund.
The $213bn pension fund said it will invest in ARA Real Estate Partners Asia II, managed by the ARA Private Fund Platform.
NYSCRF said Asia is projected to “grow faster” than either North America or Europe, driven primarily by a “rising middle class and increasing intraregional trade”.
In addition, NYSCRF said apart from benefiting from Asia II’s geographical diversification, the fund’s “lower price point and [value-add] investment risk strategy” differs from the pension fund’s other fund investments with Asian exposure.
Asia II will mostly target office buildings, logistics and industrial assets and retail properties that it can improve over the long term.
According to NYSCRF, Asia II will target a net internal rate of return of at least 12%, using leverage with a maximum of loan-to-value ration of 55%.
NYSCRF invested $200m in the fund’s predecessor, known as Morningside Investment Partners, a 2013 vintage fund.
