REAL ESTATE - The New York State Teachers Retirement System has made decisions on $550m worth of real estate investments. This activity took place at the pension fund’s board meeting on October 26.
The pension fund made two commitments to real estate investment funds. One of these was a $50 million commitment to the USAA U.S. Industrial REIT II. This is a commingled fund managed by the USAA Life Insurance Company. This is the first time that NYSTRS has invested with the manager.
The commingled fund will be investing in warehouse-distribution industrial product. The vast majority of the deals for the fund will have a core strategy. This will be buying existing properties.
Some transactions could be value-added. There will be no development transactions. The commingled fund will mostly be looking at properties that are located in the western part of the United States.
NYSTRS made another $50 million commitment to the CPI Capital Partners North America, L.P. The manager of this commingled fund is Citigroup Property Investors. It will be looking at value-added and opportunistic kind of transactions.
The pension fund’s real estate staff made these commitments for two reasons. One is more diversification within its real estate portfolio. It also was impressed with the past performance of both fund managers.
NYSTRS has hired four managers to create a global REIT investment program. The managers it selected are LaSalle Investment Management, RREEF, Citigroup Property Investors and European Investors. Each of these firms was awarded an allocation of $100 million.
The pension fund anticipates that the Global REIT program will give it an additional level of diversification within its real estate portfolio. This will happen by investing in countries that it has had limited exposure to.
NYSTRS expects that the managers will be active in countries like Asia and Europe. The pension fund defines a global REIT program as one that does not include investing in companies that have assets in the United States.
The pension fund did make one change to an existing REIT manager’s guidelines. This was with Prima Capital. The change was to allow up to 20% of the NYSTRS’ $50 million commitment to be placed into investment-grade REIT bonds. This will allow the institution to get added flexibility to invest in bonds issued by REITs with desirable property and geographical exposures.