Tennessee Consolidated Retirement System (TCRS) has approved a $100m (84.9m) commitment to a JP Morgan Asset Management US residential development fund.
According to TCRS, the JP Morgan Sunbelt Residential Development Fund is planning to raise $500m.
The pension fund told IPE Real Assets that there are “significant return margins on ground-up development projects versus purchasing existing assets with multifamily properties”.
The fund will be seeking transactions that can generate a 14% net internal rate of returns and intends to develop, lease up and sell core multifamily assets over the five-year life of the fund. The plan is to add leverage of up to 65% of the total development cost.
JP Morgan confirm it is fundraising but declined a request for further comment.
TCRS said it has also bought the 205 Airport Center industrial asset in Portland for $43m and invested $10m as an add-on purchase for an industrial asset in La Mirada, California via separate account investments with DWS.
The pension fund acquired a ground lease on the La Mirada property for $53m in 2016. The new capital will allow the pension fund to merge the fee and leasehold positions and eliminate future ground rent payments, TCRS said.
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