UNITED STATES - Teacher Retirement System of Texas is planning to invest approximately $500m (€368.2m) in core strategy real estate over the next 12 months.
The pension fund is expecting to complete this either by investing in a commingled fund or a limited partnership fund, where Texas Teachers is the only investor.
On a long-term basis, however, the total amount to be invested in core strategy could be in the range of $1bn-$1.5bn.
The pension fund's long-term strategic plan for real estate is to have 40% of the pension fund's real estate portfolio placed in core assets.
The pension fund believes now is a good time to place capital in the sector as there has been a 100-150bp increase in cap rates for core assets, given the drop in real estate values over the past year.
It's likely a decision as to which real estate managers will be hired will be made sometime in the summer.
Texas Teachers will give all of its real estate managers full investment discretion to select properties without the approval of the pension fund.
It will invest in the four main property types , which are typically established and leased assets.
The pension fund has a return target for core to exceed the NCREIF Open Ended Diversified Core Equity return and is willing to carry leverage up to 50% on its core portfolio.