The State Universities Retirement System (SURS) of Illinois has issued a request for proposals (RFP) for one or more real estate firms to invest a reported $100 million to $150 million in core, open-ended equity funds focused on US real estate.
SURS will give preference to funds that are diversified across multiple property types and managed by firms with an established track record, although first-time funds also will be considered. Responses to the RFP are due by 5 November, with finalists to be selected by December. The winning manager or managers will be recommended to the SURS board of trustees by February.
The pension plan has initiated its search for core real estate managers with the goal of implementing a 10 percent long-term allocation target for the asset class, including 6 percent to private real estate and 4 percent to REIT securities. “The real estate portfolio is the asset class farthest away from its policy targets, as of 30 June and so should be addressed in a timely manner,” the pension noted in its fiscal year 2013 investment plan, which was released last month. SURS’ $978 million real estate programme represented 7.2 percent of total assets as of 31 August.
Within real estate, SURS currently has allocated 31 percent of its portfolio to core, 21 percent to opportunistic and 1 percent to value-added strategies, according to the investment plan. The remaining 47 percent of the portfolio has been allocated to REITs.
Last year, SURS conducted a search for opportunistic real estate managers to oversee $150 million in new investments via either a direct fund or fund of funds structure. In February, the pension plan approved the selection of the Franklin Templeton Private Real Estate Fund and the Mesirow Financial Institutional Real Estate Investment Program II for fund of funds mandates.