NYSTRS beefs up real estate debt exposure with $200m commitment

The New York State Teachers Retirement System (NYSTRS) is investing $200m (€182.7m) in real estate debt strategies.

The pension fund is committing $100m to the TCI Real Estate Partners Fund II, and the same amount again to the Brookfield Real Estate Finance Fund V. 

In an email, NYSTRS cited its “long and successful” track record as a debt investor.

“An extended period of historically low interest rates associated with traditional mortgage loans makes this space an attractive alternative in the current environment,” it added. 

While TCI Fund II is investing in assets in Western Europe, NYSTRS said it was unconcerned about the strategy despite the Brexit situation.

“The focus on institutional-quality investments in select markets utilising top-tier sponsors limits the risk,” it said.

TCI Fund II is investing in high-quality first-mortgage investments with top-tier sponsors focusing on development in Western Europe and the US.

Brookfield Fund V looks to make subordinated debt investments on high-quality transactional properties in major US markets.

The anticipation is that 80% of the portfolio will involve office, industrial, retail and apartment assets.

Investment in hotels is projected to be 10%, with another 10% in other property types.

“The strategy provides the system with a good risk-adjusted return,” NYSTRS said.

The pension fund declined to state targeted returns for the fund.

NYSTRS has also approved a $100m allocation to Lone Star’s Fund X while extending contracts with two of its global REIT managers, RREEF America and LaSalle Investment.

The companies manage portfolios valued at $305.3m and $132.5m, respectively.

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  • QN-2398

    Asset class: Real Estate.
    Asset region: The client will consider: Europe ex. UK, Europe incl. UK and UK Only Funds.
    Size: EUR 60 - 100 million per investment.
    Closing date: 2018-01-31.

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    Asset class: All/large Cap Equities.
    Asset region: Global Developed Markets.
    Size: $100m.
    Closing date: 2018-02-02.

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