​Louisiana Teachers to focus on real estate debt and value-add strategies

Teachers’ Retirement System of Louisiana is favouring value-add strategies and debt investments as it plans to invest up to $400m (€340m) in real estate over the next 12 months.

The pension fund estimates it will invest between $300m and $400m in real estate and up to $100m in infrastructure during its 2018 fiscal year, according to a board meeting document.

Investment consultant Hamilton Lane has identified value-add and debt investments as offering the best opportunities for Louisiana Teachers.

The board meeting document shows that Hamilton Lane is advising that value-add investments are attractive due to the mature stage of the market recovery in the US and because they are more defensive than higher-return, opportunistic strategies.

It said real estate debt is also attractive as it can generate strong cash flows and offer downside protection.

Louisiana Teachers is likely to invest through commingled funds.

It also plans to invest up to $100m in infrastructure, maintaining relationships with existing external investment managers and selectively adding top-performing ones.

The pension fund has made progress on its search for managers to oversee investments in global real estate investment trusts.

It has narrowed down the search to six finalists: AEW, Brookfield, CenterSquare, Cohen & Steers, Dimensional Fund Advisors, and Principal Real Estate Investors.

The amount allocated for the search is 2% of total assets, or up to $360m.

A final decision on the search will be made by the pension fund at its board meeting on 8 September.

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