Pennsylvania Public School Employees’ Retirement System (PSERS) is investing $100m (€89.7m) in Angelo Gordon & Company’s latest European real estate fund.
The investment in AG Europe Realty Fund II will help increase the pension fund’s weighting to value-added investments, which, at 39.4%, is below its 50% target, according to a board meeting document.
Pennsylvania PSERS said European real estate was in an attractive macro-investment environment, with prices still below peak levels and strong fundamentals including stable demand, low vacancy, limited new supply, and ongoing deleveraging by financial institutions.
It said Angelo Gordon had a strong track record in the region Europe, having purchased around $1.7bn of real estate debt and equity since 2009.
The company, which did not comment, has realised eight investments resulting in a gross internal rate of return of 33%.
Pennsylvania PSERS expects the fund to invest 30-40% of its capital in the UK, 15-25% in Germany, 10-15% in France and the Netherlands, with the potential to invest in other Western European markets.
Office buildings are to make up 40-60% of the portfolio, alongside sectors including retail, hotels, apartments and industrial.
The fund will invest in properties, debt and real estate operating companies.