San Francisco Employees’ Retirement System (SFERS) is committing €75m (€60.9m) to Exeter Property Group’s latest European real estate fund, according to a board meeting report.

The investment in Exeter Europe Value Venture III will increase its exposure to industrial real estate, which is currently provided by a $393m investment in the Prologis Targeted US Logistics Fund.

IPE Real Assets reported in September last year that Exeter was close to raising up to €700m for Exeter Europe Value Venture III, with the New Mexico State Investment Council approving a $75m commitment.

It is Exeter’s first commingled European fund. Its two predecessors were separate accounts established in 2014 and 2015.

Using up to 65% leverage, Exeter III will target assets that can produce a net return up to the mid-teens.

The plan is to buy existing assets that are under-leased. It will also invest in development and redevelopment projects to create additional value.

According to industry sources, many US pension funds and other institutional investors are looking at Europe as a strong investment opportunity. They believe the economic recovery is still about a year behind the US with potential for further growth before peaking.