The Pennsylvania Public School Employees’ Retirement System (PSERS) has backed Blackstone’s latest real estate mezzanine debt fund, for which the manager is seeking $4bn (€3.6bn).
Pennsylvania will commit up to $100m to the vehicle, which will originate and structure mezzanine debt opportunities in North America and Europe.
Courtland Partners, which advises the pension fund, recommended the commitment, according to a PSERS document.
The third fund from the Blackstone Real Estate Debt Strategies (BREDS) series, launched in 2008, will invest in bridge and transitional lending, whole loan syndications, global lending, construction and legacy loans.
The fund has no size cap.
BREDS II is currently yielding 9.1%.
PSERS has so far committed around $1.6bn to seven Blackstone-managed partnerships.
As of June, Blackstone generated a 14.18% net IRR for PSERS across real estate private equity and debt funds.
Earlier this year, BREDS took on $4.2bn of first-mortgage loans in Mexico and Australia as part of its $23bn purchase with Wells Fargo of a portfolio sold by GE Capital Real Estate.
PSERS is also investing $100m in Exeter Property Group’s Core Industrial Club Fund II.
The 12-year fund will build a diversified portfolio of single-asset properties and small multi-building-packaged industrial property transactions across the US, with at least 66% invested in prime markets and a maximum 20% in any one market.
PSERS said it wanted to maintain exposure to core industrial real estate by holding a portfolio of key properties that provide a net annual income return of 6.5-7%, until the time is right to sell.
The fund, which has two three-year extension periods and is leveraged at 50%, is expected to be invested within four years of final closing.
The pension fund has, since 2011, committed $150m to two Exeter Value partnerships.
Exeter has in the past invested with Singapore’s sovereign wealth fund GIC.
The pair agreed a €300m joint venture in European logistics in March this year.