UNITED STATES – Pennsylvania Public School Employees’ Retirement System is backing two value-added real estate funds targeting a number of sectors in the US and logistics in Europe.
Cabot Industrial Value Fund IV, which is seeking to raise $650m (€503m) in equity, will invest in industrial properties in the US and Europe. AREA Value Enhancement Fund VIII, which has a $750m fundraising target, will invest across sectors in the US.
According to Laurann Stepp, real estate portfolio manager at Pennsylvania PSERS, 20% of the fund managed by Cabot Properties can be invested outside North America and is likely to include the UK and Netherlands.
The pension fund has identified an opportunity to purchase stabilised core industrial assets in the UK at yields commensurate with value-added-type investments.
Cabot, which already manages a $90.8m UK portfolio spanning 1.23m sq ft of space, will be targeting value-added returns of 12-14% with a gearing level of 65%.
AREA Property Partners' fund will seek to construct a portfolio of apartments, industrial, hotel, retail and office assets across the US.
According to William Stalter, real estate portfolio manager at Pennsylvania PSERS, the AREA fund will seek to generate gross returns of 15-18% (8-10% current yield) by capitalising on distress, deleveraging and recapitalisation opportunities.
In other news, Indiana Public Retirement System (INPRS) has approved a $100m commitment to the H/2 Core Real Estate Debt Fund.
The open-ended fund, managed by H/2 Credit Manager, originates and acquires senior mortgage loans and other non-distressed commercial real estate credit investments.
The commitments follows an investment in a previous fund, H/2 Investors II, in 2010. INPRS has invested $400m in real estate debt strategies since 2008.