Illinois Teachers commits $150m to Starwood

The $35 billion pension system has committed the exact amount for which the Greenwich, Connecticut-based firm is offering fee breaks on its latest fund, which recently held a first close on $1.2 billion.

The Teachers’ Retirement System of the State of Illinois
has committed to Starwood Capital Group’s latest global distressed real estate fund. A spokesman for the $34.6 billion state pension system confirmed that its trustees approved an allocation of $150 million to the Greenwich, Connecticut-based firm’s Starwood Distressed Opportunity Fund IX. 

Although representatives from the Prairie State pension fund did not disclose whether they received fee breaks, Starwood is offering management fee breaks to institutional investors joining the first close and to investors committing $150 million or more of equity. 

As PERE reported early last month, Starwood’s latest commingled vehicle held a first close on $1.2 billion in equity in December, just four months after its initial launch in August. Fund IX, which is targeting between $2 billion and $3 billion of equity, will focus predominantly on distressed opportunities in the US, although the firm will be able to invest between 20 percent and 30 percent in Europe and a further 10 percent in emerging markets. 

In December, it was announced that Illinois Teachers agreed to commit $200 million to Blackstone Real Estate Partners (BREP) VII, The Blackstone Group’s current global real estate fund, which is targeting a capital raise of at least $10 billion. 

Over the past 20 years, Starwood has averaged gross IRRs of more than 30 percent on its funds. The firm is expected to hold a final close on its latest fund by the summer.