REAL ESTATE – The Teachers’ Retirement System of the State of Illinois has taken action to invest $300m (€226.9m) into new real estate investments.
Two of these investments involve committing capital to office buildings, one of which was a $100m commitment to the Hines US Core Office Fund. This is a follow-on investment, as the pension fund had made another $100m commitment to the fund in 2005.
The commingled fund has a core investment strategy to invest in fully leased existing office properties, in markets that include New York, Washington DC, Boston, Chicago, Atlanta, Houston, Los Angeles, San Francisco and Seattle.
The pension fund was looking at investing more capital into office assets. Office buildings made up only 26% of its portfolio in Last September, while NCREIF numbers for offices are at 38%.
Hines has total commitments in the US Core Office Fund at $1.41bn, while the total assets in the fund came to $3.3bn, end September.
The other office building commitment was for a separate account relationship with Lincoln Property Company Realty Advisors for an amount of $100m. Illinois Teachers has worked with the manager for several years on this account.
There are now a total of eight existing assets in the relationship comprising seven office buildings and one retail property with a current portfolio value of $367.4m.
The separate account has a value-added investment strategy, involving buying existing under performing assets. The goal is to get the properties leased up and sell to buyers who are looking for core assets.
Lincoln Property Company will be looking in the major metropolitan markets across the US including areas like San Francisco, Boston, Chicago and Atlanta. The real estate manager will be looking for IRR returns in excess of 10%.
Illinois Teachers made commitments of $50m each to two commingled funds managed by CB Richard Ellis Investors. One was the Strategic Partners Europe Fund III. Other recent investors in this fund with a $191.7m commitment are the California State Teachers Retirement System. The other commingled fund was the Strategic Partners UK Fund III.
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