State Universities Retirement System of Illinois has begun moving capital out of real estate investment trusts (REITs) and into funds, following a search for private managers.
Douglas Wesley, chief investment officer for the $18.5bn (€16.2bn) pension fund, told IPE Real Assets: “We are transitioning out of global REITs and looking to increase our global real estate exposure through direct fund investments going forward.”
He said the global REIT portfolio, which is managed by BlackRock and was valued at $748m at the end of June 2018, will be liquidated over time.
Following a search for real estate and infrastructure fund managers, Illinois SURS said it has made a first investment, committing $75m to the Blackstone Real Estate Partners Europe (BREP) VI.
“Investing in Europe is an opportunity to invest in a geographic area of supply-constrained, fragmented markets with improving fundamentals,” Wesley said.
“Blackstone has generated strong returns for BREP Europe investors, demonstrating an ability to source unique opportunities, execute with speed, scale, and certainty, and drive value through active asset management in any market environment.”
Less than 10% of the pension fund’s $1.5bn real estate portfolio is in Europe.
The pension fund previously stated in a board meeting document that it is planning to invest $350m with a number of real estate and infrastructure managers this year.