NYSTRS increases real estate allocation, backs Brookfield debt fund

The New York State Teachers’ Retirement System has increased its allocation for real estate and backed Brookfield Asset Management with a $300m (€270m) commitment.

The US pension fund increased its target allocation from 10% to 11% while awarding Brookfield Asset Management a further $300m for a real estate debt separate account.

The amount follows a $350m allocation in December last year.

The pension fund said Brookfield’s strategy was “well-positioned for current real estate market conditions” and would add to the pension fund’s floating-rate short-duration debt product through a “relatively conservative strategy”.

All of the capital for the separate account will be invested in the US through first mortgage loans and subordinated debt.

The primary focus will be on a combination of office, industrial, apartments and retail assets.

It is unclear how much additional capital the pension fund will have to invest with the new allocation, due to the size of the pension fund’s equity real estate portfolio.

The portfolio totalled $11.7bn at the end of March, accounting for 11.1% of the pension fund’s total plan assets.

The investor is allowed to invest in equity real estate in the range of 6% to 16% of total plan assets.

NYSTRS has also put $50m into the Rockpoint Growth & Income Fund II as a follow-on commitment.

The pension fund made a $50m commitment to Rockpoint Growth and Income Fund I.

NYSTRS has also extended contracts with Cohen & Steers Capital Management and Prima Capital Advisors.

The former relationship invests in REITs and real estate operating companies, while Prima Capital Advisors invests in CMBS, investment-grade REIT bonds, first mortgage loans and mezzanine loans and/or B-Notes.

The current value of this portfolio is $536m, with the relationship first agreed in 2003.

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