Texas Teachers invests $250m in green property with Principal

The Teacher Retirement System of Texas (Texas Teachers) is investing $250m (€230m) in green property funds managed by Principal Real Estate Investors.

The US pension fund committed $100m to Principal’s Green Property Fund II and $150m to the manager’s Green Property Sidecar II fund.

The manager said it would seek existing properties with potential for improvement through value-add plans and opportunities to invest in new projects. 

Targeted property types include office, industrial, retail and apartment assets.

The manager is looking to add LEED silver status to assets, as well as use e-commerce-friendly construction materials.

Principal will invest capital for Green Fund II in the top 25 US markets, targeting a 15-20% net IRR.

The company is still investing capital for its first Green Property Fund, which has a $1bn capitalisation.

Texas Teachers also invested $150m in the manager’s first fund, as well as $100m for co-investment opportunities.

The pension fund also committed $200m to the CBRE Global Investors Wood Partners Development 4 fund.

Wood Partners will source apartment development opportunities in the US.

Markets targeted in previous Wood Partners funds include Boston, Denver, Long Island, Los Angeles, Phoenix, San Francisco and Washington DC.