CHICAGO – December 7, 2018 – CTPF oversees a diverse portfolio of
U.S. stocks, real estate, fixed income, private equity, and
international investments which provide risk-adjusted returns
while allowing the Fund to “ride out” short-term fluctuations in
individual asset classes.
In August, CTPF concluded litigation in a lawsuit related to an
investment with DV Urban Realty Partners (DV Urban). In 2005,
CTPF joined four other Chicago pension funds and made a $25
million investment in DV Urban’s Real Estate Investment Fund.
After the general partner was removed, CTPF invested an
additional $5 million in an effort to offset losses and preserve
an asset, for a total investment of $30 million. The Fund
received a distribution of $11.9 million. The net result of
the investment was a loss of $18.1 million.
The Fund’s investment in DV Urban, made more than a dozen years
ago, concluded in August 2018 with the signing of a settlement
agreement ending litigation.
Charles A. Burbridge, CTPF Executive Director said, “while it is
not our intention to receive a loss on our investments, we also
know that nearly all investments carry risk. Our job as
fiduciaries is to measure risk v. reward. We make decisions that
will benefit our members and when there is a loss, we work
diligently to recapture the revenue. We recovered 40% of our
investment and used this as an opportunity to review the policies
we had in place to minimize this type of loss.
“The amount invested in this company was very small compared to
our total portfolio, and the upside of investing in undervalued
properties, supporting development in Chicago was advisable at
the time. Unfortunately, the decision came on the eve of the
biggest real-estate downturn in history, and the investment
didn’t perform as expected.
“The current Board of Trustees has hired additional staff members
to oversee this portfolio, and we have achieved solid
performance in our overall real estate portfolio with an 11.3%
gross return over the past five years. CTPF operates
transparently, and we encourage members to read more about our
investments in our Comprehensive Annual Financial Report.”
Frequently Asked Questions
How does CTPF allocate its assets?
CTPF’s current asset allocation policy is:
Equity
61.0%
Fixed Income
23.0
Infrastructure
2.0
Private Equity
5.0
Real Estate
9.0
When Did CTPF Invest in DV Urban Realty
Partners?
In 2005, CTPF joined four other Chicago pension funds and made a
$25 million investment in DV Urban’s Real Estate Investment Fund.
After the general partner was removed, CTPF invested an
additional $5 million, for a total investment of $30 million.
How much did the Fund recover from DV Urban Realty
Partners?
The Fund received a distribution of $11.9 million. The net
result of the investment was a loss of $18.1 million.
Why is this coming up now?
The investment generated lawsuits which recently concluded. CTPF
has officially closed the books on this investment.
What kind of investments were these?
The company invested in underdeveloped areas of Chicago with
holdings in commercial, residential, and industrial sections of
the city.
What percentage of CTPF’s assets were invested with DV
Urban Realty Partners?
When this investment was made, CTPF allocated 7% of its assets to
private real estate. The investment in DV Urban was less than
0.2% of CTPF’s total fund assets.
Who vetted these investments for CTPF?
At the time, the proposed investment was researched and evaluated
by the Fund’s former real estate investment consultant, Townsend
Real Estate Consultants. Townsend conducted a one-year due
diligence process before recommending the investment.
Who manages CTPF’s current real estate
portfolio?
Today CTPF employs a team of Investment professionals inclusive
of a dedicated real estate investment portfolio manager and an
investment consultant, Callan Associates LLC, which acts as the
Fund’s master consultant and real estate consultant providing
additional advice and counsel.