The Teachers’ Retirement System of the State of Illinois has approved $600m (€530m) of real estate commitments to two opportunity funds.
The US pension has made two $300m commitments to Lone Star’s Real Estate Fund IV and Blackstone’s Real Estate Partners VIII fund.
The two commitments from Illinois Teachers are part of the $850m planned for investment in 2015.
Having invested with Lone Star in 2000 and Blackstone in 2007, the fund said both trustees and investment staff agreed the commitments fit well within the portfolio.
Lone Star, which oversees a $22.3m portfolio for the pension fund, will invest in North and South America, Western Europe and Japan for Fund IV.
Office, industrial and retail assets, as well as apartments, will be targeted.
Secured property debt, existing properties and real estate-related operating companies are being considered by the fund manager.
Blackstone, which already manages a portfolio for Illinois Teachers valued at $533.8m, is targeting a $13bn capital raise for Partners VIII, which is focused on Asia, Europe, the US and South America.
Around 25% of the fund will be invested in Europe.
While distressed selling could provide some opportunity, the fund will focus on turnarounds or undermanaged properties.
Targeted gross levered IRR is 20% gross.
With a long-term targeted 15% allocation for real estate, Illinois Teachers still has room to invest more in the asset class.
At the end of last year, its real estate portfolio was valued at $5.75bn, making up 12.9% of its $44.7bn total plan.
