Tennessee Consolidated Retirement System (TCRS) has expanded its real estate portfolio to include single-family rental properties.

TCRS said it has approved a $125m (€102.9m) commitment to Pretium Single-Family Rental Fund III, an investment which represents the pension fund’s debut investment in a fund dedicated to the property type.

The open-ended US core-plus fund managed, by Pretium Partners, targets a 9% to 11% net internal rate of return and an 11% to 14% gross return.

TCRS told IPE Real Assets that strong “demographic tailwinds due to the ageing of the millennial generation, who still have significant student loan debt and enjoy the flexibility of renting versus buying make this property type attractive”.

The fund will be investing in key growth markets across the US southeast and southwest regions

Pretium Partners declined a request for comment.

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