NORTH AMERICA – The Teachers' Retirement System of the State of Illinois has selected Principal Real Estate Investors as its separate account manager for investing in industrial properties.
The amount of capital allocated for this account is approximately $200m (€153m).
The investment strategy for the separate account is to buy core industrial properties in the US.
The transactions will be spread out in major industrial markets across the country.
The pension fund for core investing looks for an unleveraged 5% real targeted return.
Illinois Teachers did not require any co-investment from Principal, nor did the pension fund establish an investment period for the account.
The separate account is setup not to award Principal full investment discretion.
The pension fund's investment staff and real estate manager will be involved in the investing of capital for the account, over which Principal will not have full discretion.
Illinois Teachers said it hoped the separate account would allow it get "a little closer" to its target allocation for investing in industrial properties.
It existing portfolio of industrial assets makes up 8.1% of its total portfolio.
The pension fund has a long-term target of 14.3% for industrial assets in its real estate portfolio.
Illinois Teachers has $4.6bn invested in real estate as of the end of March, representing 11.7% of its $39.6bn in total plan assets.
The allocation target for real estate is 13%, which it aims to achieve over the next few years.