Texas Permanent School Fund is making two new real estate commitments totalling $125m (€105m)
It is investing $75m in Blackstone Real Estate Partners Asia II and making a $50m co-investment in six office buildings in the Los Angeles metropolitan area.
The fund — an endowment for the benefit of public schools in Texas — has made both investments on the advice of its real estate consultant Courtland Partners, according to a board meeting document.
The consultant is still bullish on the real estate markets in Asia, the fund said, and takes the view that Blackstone’s size gives it a competitive advantage in the region.
Blackstone, which declined to comment, is aiming to raise $6bn for Asia II — $1bn more than the amount raised for the previous fund Asia I — with the new fund likely to target leverage of around 60%.
Blackstone will be putting in $50m of its own capital into the fund as a co-investment.
The fund will look for assets in Japan, China, South Korea, Taiwan, India and Australia, including offices, residential and logistics.
The separate co-investment being made by Texas Permanent will cover 7.4% of the $677m of equity invested in the portfolio — which has a total cost of $1.7bn, as stated in the pension fund.
The pension fund will get a 12% net return on the transaction, and leverage will be around 60%.
All properties in the deal are considered to be core assets.