Investors - JUNE 7, 2017

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CalSTRS adds new real estate core strategy

by Jody Barhanovich

The $188.7 billion California State Teachers’ Retirement System has plans to form a new subcategory within its core real estate holdings, according to a board meeting agenda document.

CalSTRS plans to add a “transitional-core” sub-asset portfolio and remove the specific individual asset leverage test. CalSTRS said the changes are consistent with the rules applied to its core ODCE funds that make up its ODCE benchmark.

The recommended changes by The Townsend Group reflect the advancements in de-risking the real estate portfolio and are consistent with industry evolution and practice, according to the document. The inclusion of these transitional-core assets is limited to no more than 20 percent of CalSTRS’ core portfolio, according to the document.

Core investments that CalSTRS includes in its portfolio typically include office, retail, industrial, multifamily residential and hotels as well as alternative asset types in its benchmark, according to the doc

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