REAL ESTATE - The Teachers’ Retirement System of the State of Illinois has set a 4% allocation for investing in international real estate. This will give the pension fund $200m (€156m) of capital to invest in this sector.
The pension fund will have its real estate consultant, Callan Associates, work on this strategy. The person overseeing the Illinois Teachers account for Callan is Jamie Shen.
Illinois Teachers made the decision to have Callan Associates serve as its real estate consultant. This happened at the pension fund’s board meeting in early November. This will be the continuation of a relationship that was started in 2002.
The pension fund figures that the international investments will be done by placing capital into commingled funds. Callan Associates will be responsible for finding potential investment opportunities and bring them before the pension fund’s board for possible approval. This should be happening some time next year.
Illinois Teachers figures that will give the pension fund an opportunity to maximize returns. The feeling is that yields on international real estate are higher than what is being produced on real estate in the United States.
There also will be the chance to achieve more diversification. This will happen by investing in new markets and different kinds of real estate that what is has invested in the past in the United States. This will get the pension fund ownership in real estate that will be going through different economic cycles at the same time.
Illinois Teachers had one other real estate related item at its November board meeting. This was to approve the recapitalization of Capri Capital Partners.
This became an issue as Illinois Teachers had to approve this move as the pension fund has invested the most capital of any investor with the real estate manager. Illinois Teachers has invested $1.79bn of real estate with Capri Capital.