State of Michigan Investment Board has disclosed that it recently approved two new real estate investment commitments totalling $135m (€124m), according to a quarterly investment report.

It was confirmed to IPE Real Assets that the $77.7bn State of Michigan Retirement System will go ahead with both of them, committing $100m to a separate-account vehicle to be managed Domain Capital Advisors and $35m to the Avanath Affordable Housing IV fund.

Domain will invest in real estate assets that are smaller in value than those typically targeted by large US pension funds.

The Avanath Capital Management fund invests in affordable and workforce housing, buying and redeveloping existing properties.

At the end of last year, Michigan Investment Board recorded an annualised return of 7% compared with the 5.1% produced by the NCREIF NPI benchmark.

The pension fund said the outperformance was helped by its underweight exposure to retail, investments in credit, and appreciation and gains across the portfolio.