UNITED STATES - Employees Retirement System of Texas has made its first investments in non-listed real estate funds as it seeks to build up its overall property exposure.

The institutional investor made two $100m (€80.6m) capital commitments to two funds, Cornerstone Core Mortgage Fund I and the LaSalle Property Fund.

So far the Texas fund has only invested in real estate investment trusts. It also has a long way to go before it reaches its 8% target allocation for real estate, having invested only $21.4bn - or close to 2% of its $21.4bn assets under management - at the end of March 2010.

The new non-listed fund managed by Cornerstone will make conservative debt investments in properties by providing financing with loan-to-value ratios of 50% to 60%. It will target assets across the office, industrial, retail and residential sectors.

Cornerstone is seeking to raise $1bn in equity raised, and has already attracted commitments from other US institutions, including Fort Worth Employees' Retirement Fund, which committed $25m last month.

LaSalle Investment Management's fund will invest directly in the core US markets and is seeking to raise $1.65bn in equity. Other investors in the fund include Kansas Public Employees Retirement System with a $100m commitment and Ohio Police and Fire Pension Fund with a $60m allocation.