California State Teachers Retirement System (CalSTRS) plans to increase investments in real estate debt and expand its holdings in data centres, warehouses, retail assets and housing during fiscal 2025 as it continues to reduce its office building exposure.
CalSTRS disclosed in its real estate investment plan for the fiscal year that started on 1 July that it expects to increase its real estate debt holdings, a move driven by the expectation of higher returns within a capital-constrained market.
The pension fund’s real estate holdings, valued at $47.4bn (€43.7bn), account for 13.9% of its total assets. This is slightly below the target allocation of 15% for real estate.
CalSTRS is currently rebalancing its real estate portfolio, with a particular focus on reducing exposure to office buildings.
The overall real estate portfolio has previously been overweighted in this property type. The fund held 27% of its real estate assets in offices as of the third quarter of last year, compared with the benchmark NFI-ODCE index’s allocation of 18%.
As part of the investment plan for fiscal 2025, CalSTRS disclosed that it expects to increase its exposure to data centres, warehouses, retail assets and affordable housing.
The $341.4bn pension fund may also expand its real estate emerging-manager programme through its partnership with minority women-owned firm Belay Investment Group.
To read the latest IPE Real Assets magazine click here.
