UNITED STATES - California State Teachers Retirement System is developing an emerging manager strategy in real estate for the first time.
The pension fund has created emerging manager programmes in other asset classes such as private equity, US equities and fixed income but pension fund officials believe it is worth the investment as it allows them to team up with smaller and newer real estate managers they could not have considered in the past.
This new move has already led to an initial investment of $200m (€140.3m) being placed in the MacFarlane Emerging Manager Fund IA, following a recommendation from its real estate independent fiduciary, The Partners Group.
One of the key benefits to the programme is CalSTRS does not have to conduct any due diligence as all of this work is done by MacFarlane Partners, leaving CalSTRS' real estate staff to use their time to look at other real estate investments or strategies.
This is also a new venture for Macfarlane as it has never had an emerging manager programme but has invested in building and land programmes through urban and singled-family strategies.
A total of $206m of equity is invested in the commingled fund as MacFarlane Partners invested $6m, and its strategy is to find and select smaller and newer real estate managers in local urban settings across the US.
According to CalSTRS officials, the projected fund performance is to yield an IRR in the range of 17-19%.