Pennsylvania State ERS creates new relationship with Oak Street

Pennsylvania State Employees’ Retirement System has chosen Oak Street Real Estate Capital as a real estate manager for the first time.

The US pension fund has made an initial allocation of $100m (€91.5m) to Oak Street Real Estate Capital’s Fund IV.

The pension fund wants to create long-term relationships with best-in-class partnerships, according to its annual investment plan.

It is looking to improve operational efficiency by reducing the number of funds and improve the pension fund’s leverage to negotiate lower management fees.

Oak Street Capital declined to comment.

Three public pension funds have invested capital with Oak Street Capital this year.

The Teachers’ Retirement System of the State of Illinois and Illinois Municipal Retirement Fund respectively backed the vehicle with $100m and $75m.

Oak Street Capital is planning a final close for Fund IV during the second or third quarter of this year, according to sources.

The fund is targeting US office, industrial and retail properties leased to a single tenant.

Capital is invested exclusively in investment grade or equivalent free-standing triple-net or double-net leased assets.

The values of the property are increased as the rent for the tenant rises over the life of the lease.

Recent transactions that Oak Street has completed have included assets in Illinois and Indiana.

Deals can vary from $10m to $50m, with properties acquired through a combination of debt and equity.

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