UNITED STATES - Illinois State Board of Investment has approved plans to invest $300m (€223.1m) in real estate in 2010.

The pension fund now has capital available to invest thanks to the improved performance of its overall assets during the past 12 months.

At the end of March 2009, the state's public sector pension fund was valued at $8.03bn, but assets have since rebounded to $10.1bn by February 2010.

A fall in the value of the real estate portfolio has been a key factor in whether Illinois would invest again this year as its property holdings have dropped in value from $980m or 12.2% of the total portfolio last year to $765m or 7.54% during the last 12 months.

Having made the decision to go ahead and invest, Illinois will apply two strategies this year.

One of these strategies will be to work with existing separate account managers or core holdings.  Both ING Clarion Partners and CB Richard Ellis Investors will each be awarded new allocations totaling $100m, to top up current US core property investments valued at $300m.

The remaining $100m will be invested will be placed in a value-added strategy carrying moderate amounts of leverage, and split equally across four commingled funds.

No RFP will be held but Illinois State will instead use its real estate consultant, The Townsend Group, to search and select funds over the next 12 months.

"There is a possibility we will be looking at investing capital in commingled funds that have a strategy of investing both inside and outside the United States," said William Atwood, executive director for Illinois State.

"We want our real estate portfolio to be made up of 70% core and 30% non-core," he added.

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