UNITED STATES - The Teachers' Retirement System for the State of Illinois is establishing a real estate co-investment programme following the launch of a similar strategy for its private equity allocation last year.

The pension fund intends to make direct real estate co-investments alongside fund managers, an approach that has gained traction within the private equity asset class.

Illinois Teachers has not made a decision on how much capital would be allocated to real estate co-investments, but last year the pension fund created a co-investment programme for private equity and has since invested a total of $237m (€195m).

Dave Urbanek, director of communications at Illinois Teachers, said: "The pension fund investment staff believes there are many attractive real estate investment opportunities through a co-investment structure that will be available later this year. These investments will allow the pension fund to grow its real estate portfolio in the future."

The pension fund is seeking to hire companies to advise and carry out due diligence on potential co-investment opportunities and has issued a request for proposal.

The deadline for responses is by August 16 and the pension fund plans to make a final decision before the end of October.

Illinois Teachers has an existing real estate portfolio valued at $4.4bn at the end of March 2012, representing 11.8% of total assets under management. The pension fund has a long-term target allocation for real estate of 14%.