Starwood Capital Group’s latest real estate offering, Starwood Global Opportunity Fund X, got a major boost last week with the endorsement of two Illinois pension plans. The Teachers’ Retirement System of Illinois approved a $300 million investment to the new vehicle, while Illinois Municipal Retirement Fund (IMRF) earmarked up to $50 million.
Both of the investments were at least double the pension plans’ allocations to Starwood’s previous real estate fund, Starwood Distressed Opportunity Fund IX. Illinois Teachers pledged $150 million to that vehicle in February 2012, while IMRF committed $20 million in October 2012. Starwood currently manages $135.9 million in assets for Illinois Teachers; while Fund IX is the only Starwood fund in which Illinois Municipal is invested.
Starwood’s Fund X was IMRF’s sole property investment during its May board meeting last week. However, Illinois Teachers also agreed to invest $100 million in The Carlyle Group’s new property vehicle, Carlyle Realty Partners VII. The Washington, DC-based private equity firm currently manages $394.6 million in assets for the pension plan.
“The board decided that expanding these existing relationships would be beneficial in the future for our members,” an Illinois Teachers spokesman wrote in an email to PERE. The new commitments helped to bring the system closer to its long-term real estate target of 14 percent of its total assets under management. Illinois Teachers’ actual allocation to the asset class was 12.5 percent as of March 31.
Additionally, Illinois Teachers approved the issuance of a request for proposals for a new real estate investment consultant. Its current consultant, Callan Associates, was hired in 2009, and state law mandates that all investment consulting contracts be re-bid at a minimum of every five years. However, the posting of the RFP has not yet been finalized. The pension plan’s investment staff is expected to bring a recommendation for the posting to the board at either its October or December meeting.