Alternatives investment manager PAG has gone to back to investors in a bid to enlarge its Australian real estate credit fund after exceeding return expectations.

One of the investors, Texas Permanent School Fund, is increasing its investment in the vehicle, PAG Enhaned Credit Fund.

The pension fund said in a board meeting report that it will commit $21m (€18.1m) to the fund, in addition to the $70m pledged in 2016.

According to the report, the fund provides guarantees on real estate loans in Australia and New Zealand. The credit support strategy has produced an internal rate of return above 35%, exceeding its 20% target.

Texas Permanent said Hong Kong-based PAG had gone back to the five original limited partners to ask them to increase the size of the fund from $300m to $390m.

PAG also plans to launch a second fund later this year and Courtland Partners has advised Texas Permanent to make an investment.

Texas Permanent is also investing $75m in Angelo Gordon’s $2.5bn value-add real esate fund, AG Realty Value Fund X.

The pension fund has approved a real estate pacing plan of up to $775m (€670.3m) for the second half of the year.

It plans to maintain a 35% weighting to core real estate and a 65% weighting to non-core. It plans to invest through funds and co-investments.