Walton Street Capital is seeking to raise $1.25bn (€1.1bn) for its latest real estate debt fund, according to the Arkansas Teacher Retirement System.
The pension fund stated in a board meeting report that it had approved a $40m commitment to Walton Street Real Estate Debt Fund II.
Walton Street Capital declined a request for comment.
The fundraising target could mean the fund is close to twice the size of its first debt fund, which raised $654m in 2016.
The fund manager will co-invest at least $10m in the new fund, which will structure junior loans by originating whole loans and partnering with senior lenders.
It will seek net returns of approximately 9%.
The fund will target apartments and offices in US markets, including Chicago, New York, Los Angeles, Atlanta and Washington DC. It will also consider industrial, retail and hotel assets.
The average size deal for the fund will be in the range of $25m to $75m.