NYSTRS commits $350m to RE

The $107 billion pension plan agreed to invest in equity and debt funds by Lone Star, CBRE and Brookfield.

The New York State Teachers’ Retirement System (NYSTRS) pledged $350 million to value-add and opportunistic real estate funds during the second quarter. CBRE Global Investors, Grosvenor Capital Management, Lone Star Funds and Brookfield Asset Management were among the managers it backed, according to documents from its board meeting last week.

NYSTRS earmarked $50 million to CBRE Strategic Partners US Value 7, the Los Angeles-based real estate investment manager’s seventh value-added property vehicle. The fund, which is targeting $1.5 billion in commitments, will purchase, reposition, lease and sell institutional-quality properties in select US markets. The pension plan previously invested in CBRE Strategic Partners US Opportunity, CBRE Strategic Partners US Value 6, CBRE Strategic Partners Europe Fund III and CBRE Strategic Partners UK Fund III.

Meanwhile, NYSTRS designated $100 million to Lone Star Fund IX, a $7 billion vehicle that will invest primarily in real estate-related distressed assets, in June. The vehicle will focus on residential real estate loans and securities and financially-oriented operating companies, and will invest in distressed whole loans, nonperforming loans and structured products. The new fund represents another follow-on commitment for the institution, which also invested in Lone Star Fund III, IV, V, VI and VII and Lone Star Real Estate Fund II.

Additionally, the pension plan agreed to invest $100 million in Brookfield Real Estate Finance Fund IV, a mezzanine lending vehicle that will originate higher yielding US commercial real estate debt for both acquisitions and refinancings. The vehicle, which has a $1.375 billion hard cap, will target 13 percent gross and 10 percent net returns, and mark NYSTRS’ first property debt investment with Brookfield. However, the pension plan also has invested in two of Brookfield’s core funds, Brookfield Properties Office Partners, and Brookfield DTLA Holdings.

NYSTRS also authorized a previously announced $100 million commitment to Grosvenor Capital Management Customized Fund Investment Group for the creation of an emerging manager program to be known as CFIG – NYSTRS Real Estate Investment Partners. The strategy, which will be structured as a commingled fund of one, will deploy capital in opportunistic and value-added emerging manager funds and co-investments, with a focus on North American equity and debt investments. The new vehicle represents the pension plan's first real estate-related investment focusing on emerging managers.

As of March 31, the pension plan held nearly $18.2 billion in total real estate assets, including $12.68 billion in real estate equity and $5.52 billion in real estate debt.