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Pension Fund Looks To Invest $1.5B With Bridge Industrial

Pension funds have increased their investment in U.S. industrial REITS over the past few years.

A Chicago-based industrial investor could be in line for a $1.5B infusion from the Teachers Retirement System of Texas.

TRS' board greenlighted a proposal for the massive investment this week into Bridge IndustrialBloomberg reports. The fund has $173B in assets under management, 17% of which is in real estate, and is the state’s largest pension fund.

Bridge has courted pension funds in the past. In 2021, it struck a deal with the Canada Pension Plan Investment Board to develop $1.1B in industrial properties in core U.S. markets, with CPP owning a 95% stake in the endeavor.

Last summer, TRS doled out a combined $600M to three real estate funds, including $200M to Abacus Multi-Family Partners VI and $350M to Brookfield Asset Management's Brookfield Infrastructure Fund V-A, The Real Deal reported.

Despite a pullback in new construction starts and leasing slowing in some markets, industrial fundamentals across the U.S. remained strong in the first quarter, which is helping to bolster investor confidence in the sector. 

Pension funds overall have increased investments in industrial real estate investment trusts by 103% between December 2019 and April 2022, according to a report by S&P Global, during a time when consumers flocked to the internet to shop, driving up warehouse demand among retailers. 

CBRE CEO Bob Sulentic told CNBC this week that industrial was among the stronger performers — along with institutional-quality apartments, hotels and single-family rentals — despite the hit rising interest rates and a souring economy were having on the commercial real estate market overall. 

“Some of the talk around doom-and-gloom is out ahead of what is really going on. Even retail fundamentals are improving," Sulentic said. "Rental rates are going up. So the story around commercial real estate isn’t quite what you think.”