The South Dakota Investment Council is to invest $542.6m (€484.7m) in funds managed by Blackstone and Lone Star.
Thee US pension fund committed $242.6m to Lone Star’s Real Estate Fund IV and $300m to Blackstone Real Estate Partners VIII.
South Dakota initially looked to allocate $300m to the former, expecting the commitment to be scaled back due to the fund’s being over-subscribed.
The commitment will be split equally between real estate and distressed real estate debt.
Lone Star will buy major property types directly, either through single asset or portfolio deals.
The fund, which has a hard cap of $5bn, will be investing in North and South America, Western Europe and Japan.
Blackstone’s Partners VIII fund, a $13bn opportunity fund, is targeting a 15% net IRR and a 1.7x equity multiple.
The fund will invest across all real estate sectors in the US, Europe, Asia and South America, including single assets, entire portfolios and real estate operating companies.
South Dakota is already an investor in Lone Star’s Real Estate Funds II and III and Blackstone’s Real Estate Partners series funds III to VII.