Investment aims to capitalize on undervalued properties globally
The Teachers Retirement System of the State of Illinois (TRS) is betting on real estate, allocating a portion of its pension fund to potentially undervalued properties.
TRS committed $300 million to undervalued real estate assets through Starwood Capital’s distressed global real estate fund. The investment is part of a broader strategy to allocate $450 million to opportunistic real estate during the fiscal year ending June 30, 2024.
The fund aims to raise $10 billion to invest in undervalued properties acquired worldwide. Its geographic focus is expected to be 45% to 55% in North America, 35% to 45% in Europe, and potentially 0% to 10% in Asia.
The fund’s strategy involves acquiring these potentially undervalued properties, taking public real estate companies private, and forming investment platforms.
As of May 31, TRS assets reached a record $70.98 billion, up from $70.4 billion at the end of March. The board also elected to maintain the 7% rate of return assumption for the pension fund.
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In addition to the Starwood commitment, the trustees approved several other investments:
- Private Equity Portfolio ($11.9 billion):
- $30 million to Bregal Sagemount
- $50 million to TPG Partners
- $15 million to Mac Venture Capital
- Global Income Portfolio ($16.5 billion):
- $75 million to Fundamental Advisors
- $100 million to Sixth Street Advisors
“TRS remains focused on providing expert pension service to Illinois public educators. Our investment strategy prioritizes protecting our members’ money because they count on us every month,” Stan Rupnik, executive director and chief investment officer for TRS, said in a Press release. “We continue to see growth within our investment portfolio while working to minimize the impact of market volatility. This approach has successfully delivered results for our more than 448,000 members.”
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