Ohio Public Employees Retirement System

New York City Pension Wants In On Lawsuit Against Real Estate Firm Accused of Inflating Prices

The New York City retirement system is attempting to join a lawsuit already being brought by two pension funds against a real estate firm that allegedly inflated its performance figures.

The two pension funds already heading the case, State Teachers Retirement System of Ohio (STRS) and the Ohio Public Employees Retirement System (OPERS), are claiming millions in losses.

From ai-cio.com:

American Realty Capital Properties (ACRP), a real estate investment trust provider, is facing a growing group of investors claiming it fraudulently inflated performance figures.

The $159 billion New York City retirement system and TIAA-CREF have filed complaints against the firm, requesting to join in an ongoing lawsuit led by two Ohio public pension funds.

In October 2014, nine days after the Ohio pensions first filed suit, the real estate firm admitted it had made intentional accounting errors, and purposely failed to correct other mistaken figures. Its stock plummeted by 30% within hours of the revelation, and closed trading for the day having lost roughly $2 billion in market capitalization.

[…]

“In light of general investor concerns about the quality of the company’s accounting functions, internal controls, and corporate governance (as highlighted by several embarrassing reporting mishaps), ACRP desperately sought to reassure investors that it had righted the ship and that its internal control systems were above reproach,” TIAA-CREF’s complaint stated.

Photo by Joe Gratz via Flickr CC License

Ohio Pensions Seek to Lead Lawsuit Against Firm Accused of Fraud

The State Teachers Retirement System of Ohio (STRS) and the Ohio Public Employees Retirement System (OPERS) are looking to be lead plaintiffs in a lawsuit against an investment firm that allegedly misled investors about its performance and financial state.

The alleged fraud led to investment losses of $7.5 million for the two pension funds, as well as billions in losses for other investors.

From the Pike County Daily:

Following a recent review of securities and accounting fraud allegations, Ohio Attorney General Mike DeWine announced that he has filed a motion for two of Ohio’s pension funds to lead a class of investors in a lawsuit against American Realty Capital Properties (ARCP), Inc.

The news comes after the company, a real estate investment trust based in New York City, disclosed that ARCP officials intentionally misstated company financials and subsequently covered up the accounting irregularities, resulting in approximately $3 billion in losses for the company’s shareholders, including State Teachers Retirement System of Ohio (STRS) and the Ohio Public Employees Retirement System (OPERS).

“The information American Realty Capital Properties provided pension fund managers was false, misleading, and purposefully hid accounting fraud,” said Attorney General DeWine. “This fraud inflated the true value of the company, causing Ohio teachers and public employees to lose millions of hard-earned retirement dollars.”

The motion alleges that ARCP issued materially false and misleading financial statements by, among other things, overstating reported adjusted funds from operations and then intentionally covering up their impropriety. In addition, it alleges that ARCP improperly accounted for various accruals and expenses that materially affected the company’s reported earnings per share. As a result of ARCP’s improper accounting and cover-up, key performance metrics were overstated and reported net losses for the reporting periods ending June 30, 2014 were understated. Revelation of this alleged accounting fraud by ARCP on October 28, 2014 resulted in losses in the company’s stock value of approximately $3 billion. STRS and OPERS lost in excess of $7.5 million as a result of the alleged fraud.

There are several lawsuits against the firm stemming from the fraud allegations. The motion filed by the Ohio Attorney General would consolidate those lawsuits and name the Ohio pension funds as lead plaintiffs.

Photo by Joe Gratz via Flickr CC License

Ohio PERS Invests $75 Million In Shopping Centers

The Ohio Public Employees Retirement System (PERS) is giving $75 million to FCA Partners to invest in retail real estate – specifically, large shopping centers and grocery stores.

From IPE Real Estate:

The new allocation will be invested over the remainder of this year and the beginning of next year.

Capital will be invested in a mixture of grocery-anchored shopping centres and power shopping centres across the US, with a value-add approach.

As a separate-account structure, FCA will have investment discretion within agreed investment guidelines, giving the manager the authority to make final investment decisions without approval from Ohio PERS.

The manager will invest in both debt and equity investments.

Although the relationship between Ohio PERS and FCA Partners is a new one, the manager is a spin-off of Faison & Associates, in which the fund first invested in 1995.

Since inception, the pension fund has invested $932m with the manager.

The death of Henry Faison in 2012 saw the creation of FCA Partners; Ohio PERS has therefore transferred the separate account previously managed by Faison to FCA.

The pension fund is looking to place more capital with separate account managers in value-add retail, industrial and hotel property as part of its $1.26bn allocations to separate-account managers this year.

Ohio PERS manages $88.6 billion in assets, of which 10.3 percent is allocated towards real estate.