Illinois Teachers seeks separate account manager

The $37.5 billion pension system plans to hire a firm to oversee a projected $200 million mandate in an effort to expand its industrial real estate portfolio.

The Teachers’ Retirement System (TRS) of the State of Illinois has initiated a search for a separate account manager with experience in industrial real estate to invest and manage a $200 million mandate in the sector.

“This search reflects a desire to enhance the industrial segment of the real estate portfolio, which currently is underweight its target, as well as a desire over time to reach the investment target for the overall real estate portfolio,” a spokesman told PERE in an email. Currently, industrial properties account for 8.1 percent of TRS’ $4.5 billion real estate portfolio, against a target of 14.3 percent. Meanwhile, the pension plan’s exposure to real estate overall represents 12.5 percent of its total assets, below its overall target of 14 percent for the asset class.

In its request for information, TRS said it is seeking firms with at least $1 billion of assets under management in real estate separate accounts and that either have been in business for at least five years or, if a new firm, employ principals with 10 years of investment experience and a documentable track record.

Specifically, candidates should have a track record of managing commercial real estate portfolios for a minimum of five years. If the investment track record of the firm is less than five years, the principal managers must have a successful track record of managing similar portfolios for five years or more.

Submissions are due by 15 January, with four to six semi-finalists expected to be selected for further review. The TRS board will make a final hiring decision in the spring.

Illinois Teachers’ latest real estate search follows a request for proposals issued in July for a consultant to help the pension plan expand its co-investments into real estate. According to minutes from TRS’ August investment committee meeting, staff is reviewing RFP responses for that mandate and recommendations are anticipated this month.