By Jon Peterson
Des Moines, Iowa-based Principal Real Estate Investors is now out marketing a new commingled fund investing in data center assets with a planned capital raise of $500 million, according to sources with direct knowledge of the fund. The name of the investment entity is Principal Digital Real Estate Fund.
Principal declined to comment when contacted for this story.
The planned investments for the fund will be located in the three major data center markets around the country, according to industry sources. One of these will be the Pacific Northwest. The other two are Northern Virginia and Dallas.
One of the initial investors to issue a commitment to the Digital Real Estate Fund is the Tennessee Consolidated Retirement System. This investor has placed a $100 million commitment into the fund, and it expects targeted returns for the fund of 19 percent to 21 percent.
The pension fund feels this is perfect timing for an investment in this property class. Tennessee wrote in an email that “The growing demand for streaming services, social media and other cloud-based technology, along with the increase in work from home, provide strong tailwinds to the sector.”
The commitment by the pension fund will represent its first ever investment in the property type. The commingled fund will be seeking to make two different types of investments. One part would be the acquisition of existing data center assets. The fund will also be looking to invest capital for the development of new properties.