UNITED STATES - Teacher Retirement System of Texas has widened its investments in core real estate and hired three real estate managers to look after $800m (€532.7m).
Invesco Real Estate and USAA Real Estate Company have each been given $200m to invest while LaSalle Investment Management is looking after $400m.
The pension fund believes that with pricing for real estate at or near the bottom, now is a good time to invest some capital into core assets. Cap rates have risen by approximately 150 basis points on core real estate over the last couple of years.
The Invesco separate account will focus on buying US apartment complexes and the deal with USAA will invest in the four main property types: office, industrial, retail and apartments while the allocation to LaSalle will be the founding investment for the firm's latest commingled fund.
This is the first time that Texas Teachers has invested in core assets as its real estate focus in recent years has been in value-added and opportunistic strategies where, in most cases, investments carried 65-80% leverage.
Texas Teachers is now looking to employ core and lower leveraged real estate strategies in 2010 which carry less than 50% debt.
The pension fund is now working on its tactical real estate investment plan for next year and is expecting to invest $1-2bn in real estate.