UNITED STATES - Teachers' Retirement System of the State of Illinois has hired Cornerstone Real Estate Advisers and Invesco Real Estate as its new core separate account real estate managers.
Each firm will be allocated $475.6m (€300m) of equity to invest in the marketplace, following the board's meeting on April 11.
Pension fund officials decided they wanted to hire additional core separate accounts as a way to achieve more diversification within this section of its real estate portfolio, as under its current separate account managers, the pension fund is over-allocated to retail and apartments.
The expectation is these new managers would focus more on buying office buildings, industrial properties and possibly consider investments in hotels.
More importantly, the hiring of separate account managers to invest in multiple property types is a major change for Illinois Teachers as all of its core separate account managers previously focused on a single-property type, as seen, for example, in its industrial properties account with Lincoln Property Company.
Both Cornerstone and Invesco will have full investment discretion on the separate account but managers will only invest in US-based assets.
That said, they will be looking to buy existing properties which, for the most part, are no less than 80% leased and based in major metropolitan areas around the country.
The new separate account managers should allow Illinois Teachers to get closer to its targeted real estate allocation of 14%.
Through the end of 2007, the pension fund had a real estate portfolio valued at $4.6bn. This amounts to 11% of its $41.7bn of total plan assets.