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The $63.4B New Mexico State Investment Council (NMSIC) has committed $150M allocation to ArrowMark Partners’ commercial real estate (CRE) debt strategy.
The investment is split between a $100M allocation to ArrowMark’s CRE Structured Finance Main Fund II and a $50M separately managed co-investment vehicle.
ArrowMark’s co-investment vehicle is designed to deliver enhanced yield, greater control, and long-term cost savings, while leveraging the council’s scale for favorable economic terms, noted materials from a recent board meeting.
The structure, a Fund of One, provides NMSIC with capital recycling capabilities and reduced administrative costs over successive fund vintages. The pension fund would be able to reinvest both principal and income efficiently — a priority outlined in its 2023 Fixed Income Structure and Pacing Study, which emphasized reinvestment over distribution, broader collateral diversification, and improved economic alignment with managers. The commitment also gives NMSIC a right-of-way into future ArrowMark CRE funds without incurring the full cost and diligence burden of new fund underwritings.
ArrowMark’s strategy targets value-add, as well as cash-flowing CRE opportunities in growing and liquid U.S. markets, with a focus on the middle market.
The co-investment is a B-Note program that will pursue subordinate positions in bifurcated mortgage structures alongside insurance carriers. These B-Notes — typically attached at 60–75% loan-to-value — are expected to generate net internal rate of returns of 10–12%, while the main fund targets overall returns in the 12–14% range and a 1.5x multiple on invested capital.
Scott Maynard and Mary Bates, real estate consultants at Meketa, the New Mexico fund’s advisor, highlighted to the board that the investment’s diversifying characteristics would complement NMSIC’s existing real estate debt holdings.
They noted the compelling economics negotiated with ArrowMark, including reduced management fees, a higher-than-standard preferred return hurdle, and reduced carried interest. ArrowMark committed approximately 4% of general partner capital to the fund, aligning its interests closely with those of limited partners.
ArrowMark’s CRE team brings an average of 31 years of experience across firms such as ING, PIMCO, Stockbridge Capital, and Deutsche Bank. The platform’s in-house asset management team is equipped to manage troubled loans directly, drawing on deep relationships with operators, brokers, and developers. The firm’s integrated structure allows for real-time idea generation across sectors such as hospitality, life sciences, and CMBS.
NMSIC’s allocation lands in its Private Market Strategies portfolio under the real estate debt sleeve, which currently holds a 10% allocation against a target range of 0–20%. As of March 2025, real estate sat alongside direct lending (23%), asset-based lending (9%), and special situations (27%), with opportunistic and legacy positions making up less than 1%.
On September 25th, NMSIC’s Robert “Vince” Smith announced his retirement as deputy state investment officer and chief investment officer due to a cancer diagnosis.
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