Pennsylvania Public School Employees’ Retirement System has added $300m (€215.6m) worth of new commitments to its real estate portfolio.
Up to $100m will be focused on Europe and committed to Ares European Real Estate Fund IV.
The opportunistic, commingled fund has a targeted fund size of $1bn, with a leverage limit of 75% of acquisition costs.
Fund IV will focus 75% of its strategy on the UK, Germany and France, investing in the retail, office, residential and industrial sectors, with some exposure to the hotel sector.
Limited partners in the fund are projected to achieve gross IRR of 16-20% gross and 12-16% net over an anticipated 3-5 year holding period.
Fund IV will look to capitalise on ongoing distress in major European commercial real estate markets, according to Steven Novick, principal COO Courtland Partners, which is advising the fund.
Intensive asset management and capital will be spent on under-managed and under-invested properties.
The fund will exploit “pockets of growth”, including selective development and refurbishment in prime areas with favourable supply/demand fundamentals.
Fund IV will also fix broken capital and ownership structures and provide active management to distressed property portfolios and funds.
Pennsylvania has also made a $100m commitment to the Carlyle Realty Partners VII commingled fund, which has an anticipated total equity raise of $3bn-4bn and targeted returns of 20% gross and 16% net IRR.
The leverage component on the fund is between 50% and 60%.
The fund’s main investment focus is New York City, Washington DC, Florida and Northern and Southern California.
Both debt and equity investments will be made in the residential, retail, hotel, office and senior housing sectors.
Pennsylvania has also committed $100m as a first tranche to both private debt and real estate in-house co-investment and secondary programmes.
Transactions for this strategy will be up to $15m per investment.
In other news, Kansas Public Employees Retirement System has approved a commitment of up to $40m to the CBRE Strategic Partners US Value Fund 7, a $1.5bn value-add equity fund managed by CBRE Global Investors.
The commingled fund will invest in major US markets and target office, industrial, retail and hotel properties.
