UNITED STATES - California State Teachers Retirement System is investing capital with existing real estate managers so these firms will have capital ready to place in the real estate market when conditions start to improve.
CalSTRS is aware that through the second quarter of this year the transaction activity by US pension funds on commercial properties was down by 90% from the previous year, as stated in figures from the National Council of the Real Estate Investment Fiduciaries index.
That said, the pension fund body wants some of its top and best performing managers to have some dry powder so they are ready to strike when the market shifts in the right direction.
There is no indication at this point when this will be happening but CalSTRS has made €300m (€214m) commitments with both Beacon Capital and BlackRock in preparation.
The commitment with Beacon is being placed in its Beacon Capital Strategic Partners VI commingled fund, following a recommendation from its independent fiduciary, ORG Portfolio Management.
Beacon is now in the process of raising $6bn for an office fund which will invest in up to 50% of the capital overseas.
The capital invested with BlackRock, meanwhile, was an increase on an existing value-added US apartment joint venture known as BlackRock Cal 1, and which is now worth $714m.
Up to 95% of the capital originates from CalSTRS , and assets are being used to either buy existing properties in need of renovation or to provide equity to new development projects.
Adviser conducting due diligence work on this project was CalSTRS' independent fiduciary, Courtland Partners.