UNITED STATES - Teachers' Retirement System for the State of Illinois has decided to expand its emerging manager program to include real estate for the first time.
The pension fund believes there are many firms many high quality firms that can quality for the program but Illinois Teachers only intends to consider firms with total assets under management of $2bn (€1.3bn) or less.
The pension fund is looking to team up with firms which are in the early stages of a growth as the goal is to establish relationships with these firms and provide the financial support needed to reach their full potential.
Illinois Teachers thinks this strategy is a good way to build long-term relationships so the amount of capital earmarked for the emerging market program is $500m.
The pension fund has so far only invested $125m but is still looking at firms considered to be minority and/or female-owned investment managers.
It is likely any initial commitment to a real estate manager would be in the form of a commingled fund, either be for a single property type or one covering all of the main property sectors.
Real estate is not the only new asset class that the pension fund has opened the emerging manager program as Illinois Teachers recently added private equity and absolute return investment managers - a significant step as its earlier emerging manager program was only open to the public market asset classes.
Illinois Teachers' pension fund had total assets of $38.7bn to the end of March 2008 along with a 14% targeted asset allocation for real estate.