The Oregon Public Employees Retirement Fund is investing $150m (€134.7m) in Madison Realty Capital’s third debt fund.
The commitment is the US pension fund’s first to Madison and the first time it has backed a debt fund.
The Debt Fund III vehicle, focusing on US offices and apartments, is aiming for a 16% return.
Anthony Breault, senior real estate investment officer for the Oregon State Treasury, said the investment provided the fund diversification.
Madison Realty Capital, which declined to comment, has a hard cap of $750m for the fund and will co-invest up to $5m.
As reported, the New York State Teachers Retirement System also backed the fund with a $40m commitment.
The fund will invest 50% of its capital in the New York City/Tri-State region.
Madison will originate and buy senior-secured loans, bridge loans, mezzanine debt and preferred equity investments.
Loans will typically run 1-3 years.
Oregon PERF has also committed $17.4m to Waterton’s Residential Property Fund XI.
The capital will be used for improvements of the 250-unit Chase Knolls apartment complex in Sherman Oaks, California, owned since February last year.
The property needed capital improvements larger than could be funded by Waterton’s fund, in which Oregon PERF is a limited partner, with a $100m investment.