UNITED STATES - Illinois State Board of Investment has allocated an extra $200m (€155m) to its existing separate account mandate with ING Clarion Partners as it seeks to increase its real estate exposure.
The Townsend Group advised the pension fund to increase its segregated account investments as the most effective way of meeting its strategic allocation weighting, according to Bill Atwood, executive director at Illinois State. He said: "It would take longer for this to happen on a commingled fund basis."
Real estate investments represent 7.4% of total assets under management at Illinois State, but its target weighting to the asset class is 10%.
The pension fund was comfortable awarding management of the new allocation to its existing manager. Atwood said: "We think this was the path of least resistance and we had a high level of confidence in ING Clarion in buying and managing assets for us."
ING Clarion has managed real estate assets on a separate account basis for Illinois State since 2006, when the real estate manager was awarded a $200m mandate. ING Clarion has only invested $100m of this capital, although there was no specific investment period for the mandate. ING Clarion has been given full investment discretion by the pension fund.
CB Richard Ellis Investors, which has managed another $300m separate account for Illinois State since 2006, was also considered for the new allocation.
Atwood said: "We and our consultant believe that the portfolio performance of CB Richard Ellis wasn't as strong as ING Clarion."
Bruce Morrison, managing director at ING Clarion and portfolio manager on the Illinois State separate account, said the investment strategy was focused on core properties in the US.
He said ING Clarion was targeting assets with strong tenants and leases across the office, industrial, retail and residential sectors, across the US regions.