Pramerica Real Estate Investors’ new European debt fund has been backed by New Mexico State Investment Council.

The US pension fund has approved a £70m commitment to Pramerica Real Estate Capital VI.

The investment manager, which declined to comment, is targeting £1bn (€1.26bn) for the fund, according to a New Mexico board meeting document. The manager will co-invest $50m (€45.4m) in the fund, for which it is targeting a net 12% IRR, of which 6% will be income-based.

Pramerica will provide senior debt on core and core-plus assets, as well as taking preferred equity positions in properties.

Investments in office, retail, residential and industrial assets will make up at least 85% of the fund. No more than 15% of the fund will be used to finance other assets, such as hotels or healthcare.

The fund will hold investments for around three to four years.

At least 50% of assets bought for the fund will be in the UK, with more conservative investments in Germany and Ireland.

Opportunities in high-risk and higher-return core plus investments will also be sought for the fund.

It is the first time New Mexico has invested with Pramerica in its European debt strategy, having backed the manager’s core real estate investments.

Vince Smith, deputy investment officer for New Mexico, said: “We believe there is a strong investment opportunity in Europe for debt to be placed into existing properties.

“Many of the banking institutions that have been involved in the funding of existing real estate properties are no longer in the marketplace. This has created a funding gap for managers like Pramerica and others to fill in.”

New Mexico has another $85m of tactical or non-core commitments planned for 2016 in either domestic or international opportunities.