The California State Teachers’ Retirement System real estate portfolio beat its benchmark and all other asset classes, but the 4.8% total portfolio return for 2014-15 still fell short of its 7.5% actuarially assumed rate of return.

The $191bn (€175bn) pension fund posted a 13.4% return in its real estate portfolio for the fiscal year ending 30 June 2015, compared with a 12.4% return on the custom benchmark it uses to track property performance.

Its return on property was almost the same as the 13.5% reported by the $301bn California Public Employees Retirement System (CalPERS) for the same period. But CalPERS posted a total portfolio return of just 2.4%.

Responding to the gap between actual performance and the fund’s target return, CalSTRS chief investment officer Christopher Ailman said: “The six-year bull market is admittedly long in the tooth and since the majority of our assets are in stocks, our portfolio will reflect that larger reality.”

At 12.7% of total assets, property is CalSTRS’s third-largest allocation, after global equity (57.4%) and fixed income (15.7%).

Under a plan the board adopted in 2010, CalSTRS has been increasing the capital allocated to core property, while holding allocations to value-add an opportunistic property flat.

The investment team saw supply rising and cap rates declining in all four major CRE sectors during the quarter.

CalSTRS’ had exited most listed property going into the 2014-15 fiscal year.

CalSTRS did not respond to requests for comment on investment returns.

Global equity assets returned 3.1% compared with a 3.0% benchmark gain, while fixed income returned 2.1% compared with a 1.8% gain on the bond benchmark. CalSTRS uses custom benchmarks for both equity and fixed income investments.