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NYSTRS searches for non-US separate accounts

The $109.7 billion pension system is seeking to diversify through mandates of up to $500 million.

The New York State Teachers’ Retirement System (NYSTRS) is looking to diversify its real estate holdings through new Europe- and Asia-focused separate accounts.

The Albany-based pension system, which had $109.7 billion in assets as of June 30, currently works with five separate account real estate managers, according to spokesperson John Cardillo. Through this new program, NYSTRS will give separate account managers mandates of up to $500 million.

“We are conducting a search for separate account advisors in order to expand our current roster of separate account advisors and further diversify our real estate portfolio by adding use of a separate account strategy to non-US investments,” Cardillo told PERE.

NYSTRS is working with its real estate consultant Callan Associates to conduct the search. Sarah Angus, a senior vice president at the San Francisco-based firm, told PERE it is too early in the process to determine if these account mandates will be more heavily weighted toward Asia or Europe. The pension system has not decided the number of managers it will select, nor when it will make a final decision.

Most of the capital for this diversification push will be deployed to core office, industrial, retail and apartment assets. The pension system had 37 percent of its portfolio invested in office and 27 percent in retail as of June 30, according to its annual investor report.

NYSTRS currently invests in foreign real estate solely through various funds. In the last year, NYSTRS committed $100 million each to The Blackstone Group’s fifth opportunistic European fund, Gaw Capital Partners’ fifth opportunistic Asia fund, and Niam’s sixth opportunistic Nordic fund, according to PERE Research & Analytics.