NORTH AMERICA - The Teachers’ Retirement System (TRS) of the State of Illinois has invested another $100m (€80m) with Walton Street Capital and terminated a separate account relationship with KBS Realty Advisors.

The new commitment with Walton Street is for the manager’s Real Estate Fund VII. 

David Urbanek, public information officer at the scheme, said TRS began its relationship with Walton Street in 2003, investing $200m in previous commingled funds Walton Street Fund IV and Walton Street Fund VI.

Walton Street is still raising capital for Fund VII, for which the projected total capital raise is $2bn. 

The leverage component for the fund is to be around 70%, while the net IRR for investors is expected to be 16-18%. 

The planned breakdown of the portfolio is 90% US, 3% Mexico and 7% non-North America locations.

The fund will invest mostly in office buildings, hotels and shopping centres, as well as buy existing properties and invest in distressed debt secured by properties.

Meanwhile, Urbanek said the board had concluded that the pension fund’s needs could be best served by ending its relationship with KBS and transferring management to Lincoln Property Company.

KBS, first hired in 1983, had managed a portfolio worth $345m, nearly 8% of the scheme’s overall real estate portfolio. 

These assets were a diversified mixture of value-add office buildings, residential and industrial properties spread out across the US.

The transfer of the $418m portfolio to Lincoln Property, which manages another portfolio for TRS, is a permanent one.

TRS has a real estate portfolio valued at $4.4bn, as of the end of March, making up 12.5% of the pension fund’s $37bn of total plan assets. 

The targeted allocation for real estate is 14%.