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Illinois Teachers commits $250m

The $40.2 billion pension system, which recently approved a $600 million increase in real estate investments, has committed to two new funds.

The Teachers’ Retirement System of the State of Illinois has approved two new real estate investments totaling $250 million, including $150 million to the Lone Star Funds’ Lone Star Real Estate Fund (LSREF) III and a $100 million commitment to Oaktree Capital Management’s Oaktree Real Estate Debt Fund.

The commitment to Lone Star will come from the Springfield, Illinois-based pension plan’s $4.7 billion real estate portfolio. LSREF III, which held its second and final close last month on $6.6 billion in equity, focuses on distressed debt and equity investments in multifamily and commercial real estate assets in Europe, the US and Japan. Other investors in the fund include the Teacher Retirement System of Texas, the Oregon Public Employees Retirement Fund and the South Dakota Investment Council.

Real estate currently amounts to 12 percent of the Illinois Teachers’ investment portfolio. In August, PERE reported that the pension plan would commit an additional $600 million to real estate over the current fiscal year, which began on July 1. The pension system will pursue a diversified strategy, targeting core, value-added and opportunistic investments in the US, Europe and Asia across all property types in hopes of coming closer to its long-term target allocation of 14 percent.

Meanwhile, Illinois Teachers will invest in Oaktree’s debt fund from its $6.3 billion fixed income portfolio for investments related to the financing of real estate transactions. Launched in April, the fund is targeting $1 billion in equity and will be “making debt investments on a global basis, including performing CMBS securities, first mortgages, junior secured debt and mezzanine debt,” according to board documents. Other investors in the fund include the Nebraska Investment Council, which approved a commitment of up to $100 million to the vehicle in March.