REAL ESTATE – Pennsylvania State Employees Retirement System is expanding its commitments to placing capital in opportunity real estate funds.

The pension fund will be interviewing Angelo Gordon & Co. at its March board meeting for a possible commitment into the Angelo Gordon Asian Opportunity Fund. A decision at the board meeting will be made to invest somewhere in the range of $25-35m (€37-52m).

Pennsylvania State has committed up to $75m into the Blackstone Real Estate Partners VI, LP. The fund made this decision at its board meeting at the end of January.

Townsend Group is the real estate consultant for Pennsylvania State. Its principal Rob Kochis said: "We think both commingled funds offer some good investment opportunities. Many of the markets in Asia are primed for future growth. Angelo Gordon already has staff in Seoul and Hong Kong looking at opportunities. Our client is familiar with the manager through its private equity investments in the region."

Kochis thinks the Blackstone Group offers something different. "Real Estate Partners VI is part of the Equity Office Properties Trust deal, which is a very unique transaction," he said.

Angelo Gordon is hoping for a total equity raise of $600 million for its commingled fund. It will have a wide range of investors in the fund. These will include a combination of foundations and endowments as well as public and corporate pension plans. Investors are projected to achieve gross IRRs of 20%.

The investment strategy for the fund is to include the construction of new properties. All main property types will be considered.

Blackstone Group is planning on an $8bn raise for Real Estate Partners VI. It will be investing $100 million of its own capital into the fund as a co-investment.

The opportunity fund will be looking at a variety of transactions. One part of this will be to co-invest in transactions with the manager’s other commingled fund, Blackstone Real Estate Partners II International. Other kinds of deals will include investment in office buildings in recovering markets, hotel repositionings and public to private real estate transactions.