Illinois overhauls RE road map

The Teachers’ Retirement System is reviewing its real estate allocations for the next five years as part of an annual review of commitments. The pension fund will also focus more effort on emerging managers.

The Teachers’ Retirement System of the State of the Illinois (TRS) is reviewing its real estate allocations for the next five years after approving a new “tactical plan” for 2008.

The $38.4 billion (€25.6 billion) public pension said it would overhaul its real estate road map for the next five years, with recommendations on specific proposals due to go before its board in February 2009.

“Real estate has been an important asset class at TRS for over two decades,” said TRS executive director Jon Bauman following the board’s August meeting. He argued in a statement that a new plan was need to continue producing “optimum returns.”

As part of TRS’ annual review of asset allocations, the pension fund also approved plans to allocate to emerging real estate managers through commingled funds. TRS’ real estate allocation totaled $4.7 billion as of the end of May this year, 12 percent of the fund’s overall investment portfolio. TRS was unavailable for further comment.

In June TRS reviewed its private equity allocations approving commitments of between $800 million and $1.2 billion for the coming year. The plan, TRS said at the time, would help the pension reach its target allocation of eight percent to private equity. TRS’ actual allocation to private equity is 5.2 percent.

During the August meeting, TRS also approved a €50 million commitment to Oaktree Capital Management’s second European Principal Opportunities Fund. The fund is targeting €1.25 billion for distressed debt investments, according to the Probitas Partners 2008 Private Equity Deskbook.