UNITED STATES- The Teachers’ Retirement System of the State of Illinois is commiting $250m ($186.2m euros) to real estate investment funds through a combination of new and existing managers.
New manager commitments total $150m, seeing $100m managed by Beacon Capital Strategic Partners, a further $50m invested via Blackstone Real Estate Partners VI while $100m was given to existing real estate manager ING Clarion, for its links to the Lion Industrial Trust.
These latest commitments are designed to increase the pension fund’s office and industrial real estate investments as the Illinois Teachers’ fund is now below the NCREIF percentages for both sub sectors.
At the end of last year, the pension fund had 25.4% invested in office buildings and 11.8% in industrial assets.
The pension did have a previous investment experience in the Lion Industrial Trust. It made a $100m commitment to the commingled fund in February of 2005.
Beacon Capital Partners is the manager and sponsor of Strategic Partners V, set for a potential total equity raise of $3bn. Its strategy is to invest in major office buildings in prime markets around the United States and some in Europe, to achieve projected gross IRR for investors in the fund is in the range of 18% to 22%.
Blackstone Real Estate Group is the commingled fund manager for Real Estate Partners VI and is shooting for a total equity raise in the neighborhood of $8bn to $10bn. This fund has an opportunistic strategy so some of the transactions will be looking at taking public REITs private.
And ING Clarion Partners is the real estate manager for Lion Industrial Trust which has gross asset value of $3.4bn but only invests in industrial properties through the development of new properties and the purchase of existing assets.
Illinois Teachers still has a ways to go before it hits its real estate allocation, having invested $4.17bn in real estate by the end of March this year – amounting to just 10.5% of its $39.7bn of total assets and having established a targeted real estate allocation of 14%.