Ohio Police & Fire Pension Fund is investing $120m (€111.7m) in real estate in a bid to move up the risk curve.
The US pension fund said it could invest as much as $200m in non-core real estate.
Ohio Police & Fire is only planning to invest in strategic or non-core real estate this year, with some capital planned for Europe and Asia.
Commitments of $70m and $50m have been made to Blackstone’s Real Estate Partners VIII fund and Gerrity Group’s Retail Fund II, respectively.
The Gerrity Group’s fund, which invests in necessity-orientated retail properties, buys in the western US, including Denver, Los Angeles, San Francisco and Seattle.
The fund, which has a value-add strategy, is expected to return a net IRR of 12-14%.
It looks to buy existing assets that can be improved and then sold to core buyers.
Most of its properties are anchored by grocery stores.
The commitment by Ohio Police & Fire to Blackstone VIII is a follow-on investment.
The pension fund, in a board meeting document, said Blackstone had been a strong performer in three previous commitments, producing a 14.3 % net IRR.
Real estate makes up 9.6% of Ohio Police & Fire’s total investment portfolio.
The fund, which has a $1.4bn property portfolio, has a 12% targeted allocation for real estate.