UNITED STATES - The Teachers Retirement System for the State of Illinois has sold its entire agricultural real estate portfolio for $340m (€220.2m) to TIAA-CREF.
The pension fund made a decision last year to exit the agricultural market as officials felt the timing was right to move the assets out of the portfolio.
Farmland values and income were on the rise at that time and the pension fund wanted to take advantage of a strong market.
Illinois Teachers took this decision along with its real estate partner, Cozard/Westchester Premier Partners III, with whom it has had a partnership since 1991.
The portfolio sold contained regular crops such as oranges, almonds and apples, and was located in seven states of the US, in Arizona, California, Florida, Illinois, Indiana, Ohio and Washington.
The pension fund will now use the proceeds from the agricultural assets to fund its expansion into international real estate, and further diversify the real estate portfolio by investing in international properties that have a lower correlation to domestic real estate.
Illinois Teachers has established it wants to invest 4% of its total plan assets and 10% of its overall real estate assets in an international strategy, as well as reach a targeted real estate allocation of 14%.
So this will be accomplished through committing capital to commingled funds, including $75m to Carlyle Europe Real Estate Partners III and LaSalle Asia Opportunities Fund III along with $100m to Macquarie Global Properties Asia Fund III.
The pension fund had a real estate portfolio valued at $4.6bn by the end of 2007, representing 11% of the fund's $41.7bn in total assets.