GLOBAL - The Employees Retirement System of Texas has made a $60m (€43m) commitment to the Madison International Real Estate Liquidity Fund IV.

The pension fund is expecting to achieve a 16% leveraged internal rate of return on the investment.

The fund has a value-added strategy, focusing the four main property types of office, industrial, retail and apartments.

The majority of the deals will be properties in the US, although the fund will have the ability to invest a portion of its capital in the UK and western Europe.

The investment strategy for the commingled fund will be to take out existing equity capital sources in core properties.

The allocation to Real Estate Liquidity Fund IV, managed by Madison International Realty, represents the pension fund's first value-added investment within its private real estate portfolio.

This year, Texas Employees committed $100m to the LaSalle Property fund for core equity real estate and another $100m to the Cornerstone Core Mortgage fund for a core debt investment strategy.

With the commitment to Liquidity Fund IV, the pension fund has now made $260m worth of real estate commitments this year. It started the year projecting total commitments of $540m.

Pension fund officials said the shortfall was primarily the result of a change in market outlook.

Texas Employees is now looking at emerging managers as its next private real estate investment. There has been no timetable established for making a final decision on this, however.

According to the fund, the strategy would be to hire a manager of emerging managers focused on investing in the US.