Tennessee Consolidated Retirement System (TCRS) has increased its activity in US real estate debt with new commitments totaling $700m (€609.6m) through Ares and JP Morgan open-ended funds.
The pension fund has placed $400m into the Ares Real Estate Income Fund and committed $300m to the JP Morgan Commercial Mortgage Income Fund.
TCRS said: “Core real estate debt currently offers an attractive income return twice that of the ODCE benchmark. As a result, debt strategies provide attractive, risk-adjusted returns that complement the overall portfolio.”
The Ares fund will look to produce net returns of 7% to 8% over a full market cycle, while the JP Morgan fund targets net internal rates of return in the range of 6% to 8%.
TCRS expects both funds to place debt primarily in multifamily and industrial assets, while maintaining flexibility to invest in other property sectors as opportunities arise.
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