UNITED STATES - Pennsylvania State Employees Retirement System is thinking of making a commitment to a $1bn (€681.3m) Latin America residential fund being launched by Pramerica Real Estate Investors.
Although it is looking at making just a $25m commitment at its board meeting in December, the pension fund would be among the first investors to go into the Latam Residential fund III, which will have total capitalization of $4bn.
Rob Kochis, principal with Pennsylvania State's real estate consultant The Townsend Group, said it would be an interesting move as the fund's strategy is to invest mostly in high-end residential developments in Mexico.
"There is a compelling investment story for residential in Mexico but the concern that we have is with the size of the fund. The last residential fund that Pramerica did in Latin America was for $300m. That's a pretty big increase from one fund to the next," he added.
Projected returns for investors are a gross IRR of 20% and a net IRR of in excess of 17%, over 8 -10 years.
A need for such properties is being created by strong economic growth of the middle-class population in Mexico.
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