Illinois commits $225m to non-core managers

After issuing an RFP in July, the $27.4 billion pension plan has agreed to invest with eight new value-added and opportunistic managers, including AEW and Blackstone.

The Illinois Municipal Retirement Fund (IMRF) has approved commitments of up to $225 million to non-core real estate funds at its meeting late last week.

In July, IMRF solicited proposals from non-core commingled real estate fund managers. Although the size of the mandate was undetermined at the time, the pension plan said it had at least $100 million to allocate to non-core real estate. After receiving 65 responses and conducting extensive reviews, including onsite visits by IMRF staff, the pension’s board approved investments to six opportunistic and two value-added managers.

The opportunistic commitments included up to $25 million to AEW Capital Management’s AEW Partners Fund VII; up to $50 million to The Blackstone Group’s Blackstone Real Estate Partners VII; up to $25 million to Dune Real Estate Partners’ Dune Real Estate Partners III; up to $20 million to Starwood Capital Group’s Starwood Distressed Opportunity Fund IX; and up to $30 million to Torchlight Investors’ Torchlight Debt Opportunity Fund IV.

IMRF also committed to value-added managers CBRE Global Investors, LaSalle Investment Management and Rockwood Capital, earmarking up to $30 million to CBRE Strategic US Value Partners VI; up to $20 million to LaSalle Income & Growth Fund VI; and up to $25 million to Rockwood Capital Real Estate Partners Fund IX.

The commitments, which the Oak Brook, Illinois-based pension plan will fund from cash reserves or Northern Trust index funds, will help IMRF to reach its target real estate allocation of 6 percent. As of September 30, the pension system had allocated 2.8 percent of its total assets to the asset class.

Committing to multiple managers, rather than selecting a single firm, will further diversify the pension plan’s non-core real estate programme by both investment manager and strategy. As of 30 June, IMRF’s non-core real estate portfolio consisted of 10 mandates with a total value of $255 million and $185 million in unfunded commitments.