NYSTRS names new head of real estate

The $90.9 billion pension system has appointed David Gillan to oversee its $15 billion real estate investment portfolio, as his predecessor now becomes head of private equity.

The New York State Teachers’ Retirement System (NYSTRS) has named David Gillan as its managing director of real estate, effective immediately. He succeeds John Virtanen, who had served as head of the department since 2005 but now has been named managing director of private equity. Both appointments were approved at NYSTRS’ board meeting late last week.

As managing director, Gillan will be in charge of an 18-person staff and oversee the pension system’s $15 billion global real estate investment portfolio, which includes direct property investments, global real estate funds, securities and commercial lending. He also will continue to serve as a member of NYSTRS’ internal investment committee, which is responsible for the overall direction and strategy for the pension plan.

As of December 31, real estate equity investments accounted for $9.7 billion, or 10.8 percent, of NYSTRS’ total investment portfolio, while real estate debt investments totalled $5.3 billion, or 5.7 percent, of the total portfolio.

Gillan has worked at NYSTRS since 2001, initially focusing on investment operations and accounting for the overall system before switching to asset management in the real estate department one year later. In 2007, he was promoted to real estate manager, responsible for overall portfolio management and strategy in the asset class for the pension system. No decisions have been made yet on hiring a replacement for Gillan’s former position.

Before joining NYSTRS, Gillan was director of accounting at the Massachusetts Pension Reserves Investment Management Board, where he focused on analysis, valuation and accounting for all asset classes for the $40 billion trust. Prior to that, he spent most of the 1990s at the New York State Common Retirement Fund, where he was responsible for investment audits. Gillan, a certified public accountant, started out as an auditor with public accounting firm Marvin and Company, conducting financial audits of public and private pension plans.

On a separate note, NYSTRS committed $50 million to Cerberus Capital Management’s latest global opportunistic real estate fund, Cerberus Institutional Real Estate Partners III, according to board meeting documents. The planned investment falls within the pension system’s non-core allocation to real estate equity. As of June 30, non-core real estate comprised 24.9 percent of the system’s overall real estate portfolio. NYSTRS has not set a specific allocation target for non-core real estate, but instead aims to invest between 20 percent and 40 percent of its overall real estate portfolio in the risk strategy.

The new commitment represents NYSTRS’ third real estate investment with Cerberus. The pension plan previously committed to Cerberus Institutional Real Estate Partners in 2004 and Cerberus Institutional Real Estate Partners II in 2008.