Illinois Teachers earmarks $600m for real estate

As part of its new fiscal year investment plan, the $40.2 billion pension system is expected to continue bulking up its property holdings, including non-core real estate, where it currently is underweighted.

The Teachers’ Retirement System of the State of Illinois has approved approximately $600 million in additional real estate investments during its new fiscal year, which began on July 1. 

“The overarching goal of the 2014 tactical plan is to enhance the portfolio and bring it as close as possible to the system’s long-term allocation target of 14 percent of the total investment portfolio,” a spokesman wrote in an email to PERE. Real estate currently is about 2.3 percent underweight, accounting for 11.7 percent of Illinois Teachers’ total portfolio of $40.2 billion.

The pension system will pursue a diversified strategy that will target core, value-added and opportunistic investments in the US, Europe and Asia and cover all property types. However, Illinois Teachers currently is underweight toward its aggregate 40 percent target for non-core real estate, while it is “modestly overweight” against its 60 percent target for core properties.

The new allocation is considerably larger than the pension system’s fiscal year 2013 allocation of $400 million, but it is more closely in line with Illinois Teachers’ actual capital output during the previous 12-month period, which was $538 million as of March 31. Real estate investments during the past fiscal year included a $200 million commitment to a separate account with Principal Real Estate Investors in June and $75 million commitments each to funds sponsored by Oaktree Capital Management and GI Partners in May.