Illinois Teachers hires advisors for co-investments

The $38.1 billion pension system has tapped two consultants to assist in the creation of a new real estate co-investment program.

The Teachers’ Retirement System of the State of Illinois has hired Cleveland-based ORG Portfolio Management and Portland, Oregon’s Real Asset Portfolio Management to advise it in the creation of a co-investment program within its $4.6 billion real estate portfolio.

“These two firms will join our existing pool of investment advisors to help us identify, investigate and finalize co-investment opportunities that will enhance the system’s investment program on behalf of our members,” said Dick Ingram, Illinois Teachers’ executive director, in a statement. “The pension system is expanding its existing co-investment program in order to capitalize on opportunities that exist in the market.” 

Under the new program, Illinois Teachers will be able to directly invest in a property as a complement to an existing investment in the same property through a multi-property real estate fund. The pension system has not yet determined how much capital will be allocated to real estate co-investments.

Illinois Teachers now plans to work with its new consultants to develop the scope and methodology of identifying, investigating and reviewing potential opportunities. The new real estate co-investment program will be part of an expansion of an existing co-investment program that the pension system created within its $4.3 billion private equity portfolio in 2010. That program adds direct investments to existing commitments made to private equity funds that hold several companies. 

Last March, Illinois Teachers approved the search for a consulting firm to advise the system on the formation of a real estate co-investment program and issued a request for proposals (RFP) that summer. Proposals were due at the end of August, and Illinois Teachers was due to make a final selection in late October, according to the RFP. However, the pension plan required more time than expected to complete its due diligence on the firms that applied for the position.

Illinois Teachers, which began investing in real estate in 1983, currently has invested or committed nearly $5.9 billion to the asset class, according to its website. Its real estate portfolio includes direct and commingled fund investments in the office, retail, industrial, apartment and hotel sectors throughout the US and abroad. The pension system, whose real estate holdings currently account for about 12 percent of its total AUM, has a long-term real estate allocation target of 14 percent.