Connecticut Retirement weighs commitment to Blue Owl, returns 8.5% for fiscal year
Investors - SEPTEMBER 19, 2023

Connecticut Retirement weighs commitment to Blue Owl, returns 8.5% for fiscal year

by Lewis Dayton

Connecticut Retirement Plans and Trust Funds (CRPTF) is considering a commitment of $200 million to Blue Owl Real Estate Fund VI.

Managed by Blue Owl Real Estate (formerly Oak Street Real Estate Capital), the fund will seek to make value-add investments in freestanding, single-tenant, net-leased commercial properties occupied by investment-grade credit tenants with long-term lease contracts that include annual rent escalations.

Fund VI will invest predominantly within the United States, though it may invest up to 25 percent in Canada and up to 5 percent outside of North America, where such properties are part of a portfolio acquisition of United States and/or Canadian assets.

CRPTF committed $100 million to the Oak Street Real Estate Capital Net Lease Property Fund (rebranded Blue Owl Real Estate Net Lease Property Fund) in 2019.

CRPTF’s real estate target allocation is 10 percent, and as of June 30 its real estate allocation by market value was 7.6 percent. But as of June 30, the fund’s exposure to real estate, including unfunded commitments and recent and current recommendations, was 11.3 percent.

The $200 million commitment toward Blue Owl Real Estate Fund VI would give CRPTF a seat on the Limited Partner Advisory Council, would provide the fund more favorable fee terms and would give it the opportunity for equal co-investment.

CRPTF also released a report for the fiscal year that ended June 30. CRPTF, which encompasses both the Teachers’ Retirement Fund (TERF) and the State Employees’ Retirement Fund (SERF), posted a net return of 8.5 percent.

TERF and SERF posted net investment results of 8.35 percent and 9.02 percent, respectively, for the fiscal year. Overall, CRPTF added an estimated $1.1 billion in plan assets during the fiscal year.

“As long-term investors, single-year returns are not how we measure success, but I’m confident that we will build on this work and continue towards our goal of being among the best-performing public investors in the nation,” said Connecticut State Treasurer Erick Russell. “Maximizing pension investments is important, not just for the retirement security of retired teachers, state and municipal workers, but for all state residents. Strong returns will free up resources for other budgetary priorities, including long-term investments in our communities, and complement the progress that’s been made to build reserves and stabilize state finances.”

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