Chicago teachers’ pension fund seeks real estate debt manager

The reportedly $9.3 billion fund seeks “well capitalized and stable” firms to independently manage the firm’s core and non-core debt investments, according to a Request for Proposal (RFP) released last week.

The Chicago Public School Teachers’ Pension and Retirement Fund (CTPF) is seeking an investment manager to run an allocation for its real estate debt portfolio.

Chicago, Illinois
Chicago, Illinois

The approximately $9.3 billion pension is seeking “well capitalized and stable” firms to independently manage the firm’s core and non-core real estate debt investments, according to a Request for Proposal (RFP) released last week.

Callan Associates, the fund’s real estate investment consultant since January, will manage the proposal process.

The allocation will range between $25 million to $75 million, according to Pensions & Investments.

To independently manage its core/core plus debt strategies, CTPF prefers open end vehicles with a minimum of $1 billion in assets, while seeking closed end funds with a minimum fund size of $500 million for non-core.

Real estate investments in the fund must maintain a minimum allocation of 60 percent core real estate investments, and a maximum allocation of 40 percent to all non-core.

The fund has a 7 percent target allocation for real estate debt, or $651 million based on total assets as of June. However, last year the fund overshot the target allocation, ending last June with real estate investments accounting for 8.5 percent of total assets, or $853 million.

The target real rate of return for each major asset class is 3.9 percent, read the fund’s latest annual report.

The pension fund has an asset allocation of 2 percent real estate investment trusts, 30 percent each domestic and international equity, 23 percent fixed income, 3 percent each private equity and infrastructure, according to P&I.

Contract negotiations for the investment managers are expected to be complete by November 18, 2016. The pension fund and Callan did not respond to requests for comment.

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