NORTH AMERICA – The Pennsylvania Public School Employees' Retirement System has approved commitments of up to $300m (€223m) into three real estate investment strategies.

One of these was a commitment of up to $100m into the Paramount Group Real Estate Fund VII. 

The pension fund is projecting that it will achieve a net IRR of 10-14% and a 2x equity multiple for its investment.

The Paramount Group is looking at a total equity raise of $600m to $1bn, and there will be a total of 60% leverage placed on the fund.

Fund VII will be an office building only commingled fund looking to make value-added investments in trophy properties, assets that need re-tenanting or managing near-term lease rollover. 

The fund will have a strong emphasis on assets in New York City. Other markets of interest will include San Francisco and Washington, D.C.

Pennsylvania Public School also approved a commitment of up to $100m into the Blackstone Real Estate Debt Strategies II. 

The scheme expects the fund to target a 13% net IRR to the limited partners. 

Nearly half of the total return for investors will be coming from current income.

The long-term goal for the debt investment fund is to generate attractive risk-adjusted returns by purchasing and/or originating performing loans backed by institutional-quality properties. 

The structure of the investments will include B-notes, mezzanine debt, whole loans, participations, CMBS and preferred equity.

The Blackstone Group is the manager of the Debt Strategies II fund, for which it is seeking to raise $3bn. 

Pennsylvania's other $100m investment was placed into private markets and real estate for its in-house co-investment and secondary market programme. 

This capital will be used either to co-invest with other existing commingled funds on specific deals or buy out current limited partnership positions in commingled funds.