By Muskan Arora
The $54.9B Illinois Municipal
Retirement Fund has recently allocated up to $200M to its real estate portfolio,
along with expanding its appetite for minority and women owner firms.
“What drove us to do that really was the supply-demand imbalance in residential real estate,” said the CIO Angela Miller-May. “That's driving the opportunity in housing: the supply has just not kept up with the demand, whether it's a new-build supply or existing supply.”
Within real assets, the pension plan
committed up to $50M to Virtus Real Estate Capital IV, a fund launched in
February 2023.
Virtus is a value-add strategy fund which
primarily invests in healthcare, industrial student housing and
multifamily/residential sectors. The fund focuses on investments in North
America.
Another $50M was committed to Kayne Attainable Housing Fund, a newly launched fund.
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The fund focuses on investments within the multifamily and residential sector.
“The higher inflation that has caused the cost of materials and labor to increase — that's driving the cost of new builds, which is why the supply is not as great as it used to be,” added the CIO.
Lastly, in February, the fund approved $25 million
to Mesirow Financial Real Estate Value Fund V, $50 million to Pretium
Affordable Single-Family Rental Fund and $25 million to S2 Real Estate Fund II.
The pension plan allocates 8.66% or $4.76B
to its real estate bucket.
Within alternative investments, IMRF
committed up to $50M to Pemberton Strategic Credit Fund IV, a direct lending
fund that focuses on performing credit rather than stressed/distressed
debt and loan-to-own debt investments.
Another $50M were invested to Hg Saturn 4,
a buyout fund that will focus on European headquartered and transatlantic
businesses.
The board approved a hike in target of
minority and women led funds from 22% to 23%.
Further, the Illinois legislature has set a
target of at least 20% of investing in minority and women owned firms.
“With that top down or top up support that
we're seeing, my team and I have a shared responsibility to continue to
encourage and support diversity, equity and inclusion as a strategy to increase
our financial outcomes,” said Miller-May.
Besides investing directly, IMRF relies on a manager of managers or fund of funds to invest in Minority-owned investment managers in International Equity, Fixed Income, Real Assets, and Alternatives asset classes.
