Searches and Hires

Illinois Municipal slates $675 million for real estate, private equity

Illinois Municipal Retirement Fund, Oak Brook, on Friday approved commitments totaling up to $675 million to real estate and private equity managers.

The $39.8 billion pension fund committed up to €100 million ($117 million) to Ares European Real Estate Fund V, managed by Ares Management, which invests in European residential, retail, office and industrial real estate, and up to $75 million to Artemis Real Estate Partners Fund III, a value-added opportunistic real estate fund. Also, up to $150 million each was committed in open-end core real estate to the Heitman America Real Estate Trust, which targets apartment, industrial, office, retail, and self-storage properties, and JPMCB Strategic Property Fund, a commingled fund managed by J.P. Morgan Asset Management (JPM) that invests in high-income retail, residential, office and industrial real estate.

RFPs for both core real estate mandates were issued June 21.

IMRF also made additional commitments of up to $100 million to Buckhead Properties, a core real estate fund managed by TA Associates Realty investing in industrial properties, and up to €50 million to the Barings European Core Property Fund.

The pension fund had committed $50 million to the Buckhead fund in April 2015 and €25 million to the Barings European fund in August 2016.

Also, the plan is redeeming its $150 million investment in the Barings Core Property Fund, citing organizational reasons.

In private equity, up to $25 million was committed to Clearlake Capital Partners V, a private equity fund managed by Clearlake Capital Group that invests in software, technology, industrials, energy and consumer sectors.

As of Sept. 30, IMRF had actual allocations of 3.5% in alternative investments, including private equity, vs. its 6.4% target; and 5.4% in real estate, compared with its 8.8% target.

The commitments were approved Thursday by IMRF's investment committee.

Separately, the pension fund returned a net 3.85% for the quarter ended Sept. 30, vs. its custom benchmark's 3.27% return. As of Sept. 30, IMRF returned a net 13.37% for 12 months, 9.34% for five years and 6.19% for 10 years, compared to respective custom benchmark returns of 11.39%, 8.81% and 6.17%. All multiyear returns are annualized.

The portfolio's returns in international equity, at 6.35%, and U.S. equity, at 5.04%, drove the gains for the latest quarter, according to a report by Callan, the plan's investment consultant, while the poorest performer in the quarter was timberland, at -0.25%.

Also, the board by a 6-1 vote deferred action until its next meeting, Dec. 15, on reducing its long-term rate-of-return assumption to 7.25% from 7.5%.

The reduction was recommended by actuary Gabriel Roeder Smith in its actuarial study of the pension fund presented Friday.

Most board members wanted to have more time to gauge the effect of the reduced assumption on employer contribution rates.