The Texas Permanent School Fund has hired Cerberus Capital Management for the first time.

The US pension made a $75m (€68.3m) commitment to the Cerberus Institutional Real Estate Partners IV fund, according to a statement made by the investor during its board meeting.

The recommendation was approved on the advice of Texas Permanent’s real estate consultant, Courtland Partners.

Courtland expects at least 50% of Partners IV to be invested in Europe, taking advantage of investment opportunities arising after the UK’s decision to leave the European Union.

Capital will also be invested in the US.

The main investment focus will be non-performing and distressed real estate loans.

The preferred return target is 9%, with investors projected to achieve a 17-20% gross IRR and a 14-17% net IRR.

Courtland said the strategy for the Cerberus fund differed from Kildare European Partners II, which Texas Permanent also backed with a $75m commitment in April.

Kildare invests in much larger portfolios, ranging between $100m and $200m, while Cerberus is open to investing in smaller loans.

The manager has already invested $80m of Partners IV in 10 deals.

Cerberus can invest in assets valued as low as $5m.

Partners IV has set a debt cap of 58% on a portfolio basis and 75% on a single asset.

Cerberus is raising $1.6bn for Partners IV and has so far has attracted $1bn, including $200m from the Florida State Board of Administration.

Another $600m of commitments are in the works.