The Orange County Employees Retirement System has made a provisional commitment of $125m (€111.6m) to Kayne Anderson Capital Advisors.
The commitment could be placed into the Anderson Real Estate Debt II fund.
The fund manager has a $1.25bn targeted capital raise for the fund, with a first closing set for December.
The first transaction for the fund will be completed during the same time period.
Kayne Anderson is planning to invest all of the capital in the US.
Transactions will involve the Freddie Mac B-pieces of the capital stack for real estate debt, which would mean coming in at an LTV ratio of 63-70%.
Targeted returns would be 11% to 13%.
The B-pieces, the middle of the capital stack for each property, would come after the first mortgage debt and before both mezzanine/preferred equity and common equity.
The B-piece sector of Freddie Mac has a significant pipeline.
Kayne Anderson said in a board-meeting document that Freddie Mac had an anticipated issuance pipeline of more than $50bn for 2016.
This translates into around $4bn of annual B-Piece issuance with expected continued growth.
The Freddie Mac B-pieces issuances are backed by first mortgages on senior housing, student housing and apartment loans.
Most of the transactions for this are bond deals backed by occupied properties underwritten through Freddie Mac’s CME platform.