Teacher Retirement System of Texas (TRS) has formed a new US industrial real estate investment partnership with Banner Oak Capital Partners, a manager known for a variety of value-added real estate strategies.

The pension fund said it has provided a $379.6m (€338.5m) equity investment into the Banner Oak Development Venture II.

According to the $153bn pension fund, most of the capital for the venture will be placed into new industrial development projects. The venture will also target some existing value-add assets.

According to sources that track the sale of US industrial assets, most assets in the top core markets are being acquired with cap rates of 3% to 4%, whereas development opportunities can achieve returns that are as much as 200 basis points higher.

Texas Teachers has placed the Development Venture II into the opportunistic sector of its $18.3bn real estate portfolio.

Banner Oak Capital did not respond to a request for comment.