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Illinois TRS earmarks $140m for RE

The pension system backed two emerging managers for its latest round of commitments.

The Teachers’ Retirement System of the State of Illinois has allocated $140 million to two groups through its emerging manager program, the pension system said Friday.

In its latest round of commitments, TRS wrote a $100 million check to Chicago-based Oak Street Real Estate Capital for the Chicago-based firm's fourth core-plus fund, Oak Street Real Estate Capital Fund IV. The pension system committed $50 million to Oak Street Real Estate Capital Fund III in 2015, according to PERE data. The commingled fund series invests in net-lease properties. Oak Street also manages separate accounts for public pension plans looking to invest with newer and smaller managers.

In its February meeting, TRS also earmarked $40 million from its emerging manager program to Exeter Property Group’s latest value-added vehicle, Exeter Industrial Value Fund IV. The commitment was TRS’ first allocation to the Conshohocken, Pennsylvania-based real estate firm, which manages about $3.5 billion, according to its website.

Exeter has a $1.15 billion hard-cap for its fourth fund and plans to buy industrial and business park assets near cities and logistics hubs, such as airports and ports, in the US and in select Canadian and Mexican markets, according to board materials from another investor, the Pennsylvania Public School Employees’ Retirement System. Exeter, which typically makes equity investments ranging from $2 million to $22 million, plans to buy big box warehouses, last-mile assets and light industrial properties. The predecessor vehicle, Exeter Industrial Value Fund, generated a 16.5 percent net internal rate of return as of March 31, according to PSERS.

TRS managed $6.9 billion in real estate as of June 30, according to its most recent financial report. For the fiscal year ending June 30, the asset class produced a net return of 13.2 percent, outperforming its benchmark by 2.6 percent. The pension system had three real estate managers in its emerging manager program as of June 30, including Oak Street and Exeter.