Ohio School Pension Makes $350 Million in Real Estate Commitments; Hires REIT Portfolio Manager

business man holding small model house in his hands

The Ohio School Employees Retirement System has committed $350 million to three real estate funds, as well as hired BlackRock to manage a $100 million REIT portfolio.

Reported by Pensions & Investments:

[Ohio SERS] committed $200 million to CBRE U.S. Core Partners fund, a core real estate fund managed by CBRE Global Investors; and $75 million each to Almanac Realty Securities VII, a value-added real estate fund managed by Almanac Realty Investors, and Mesa West Core Lending Fund, an open-end, direct lending real estate fund managed by Mesa West Capital.

The BlackRock hire and the three commitments fall within the pension fund’s 15% global real assets target, which was created in June 2013 to reflect greater investment flexibility than the previous 10% target to real estate.

As of Sept. 30, the actual allocation to global real assets was 10.6%.

The Ohio School Employees Retirement System manages $12.6 billion in assets.

Alaska Pension Explores Investments In Medical Offices, Other Real Estate

alaska mapThe Alaska Retirement Management Board, the entity that manages investments for the state’s largest pension plans, is looking to shift money out of its REIT portfolio into private real estate investments. The Board has its eye on medial officer buildings.

From IPE Real Estate:

Steve Sikes, state investment officer, said the fund is yet to decide how much capital will be moved from REITs.

“REITs are viewed as a potential funding source for private real estate investments because we are at the high end of the target range for public real estate securities in the portfolio,” he said.

Alaska’s REIT portfolio accounts for 21.1% of its total real estate portfolio. As of June, the REIT portfolio – valued at $322m (€254m) – returned 12.95%, against the FTSE NAREIT All Equity REITs Index of 13.02%.

The fund’s investment staff will explore new private investments in medical office buildings, value-added and opportunistic funds, as well as participating mortgage investments – which would be a new strategy for Alaska.

“Up to now we have not invested in this strategy,” said Sikes. “It offers the potential for higher returns with an attractive income component.”

The LaSalle Medical Office Fund II, which is now being wound down, has given the Alaska an insight into the sector that it believes offers good income.

“Value-add/opportunistic and participating mortgage investments are categories of real estate investments that may create attractive returns,” said Sikes.

Alaska could invest additional capital through core separate account managers – depending on the sale of non-strategic assets at attractive prices. Sikes said he could not predict the amount of property it would sell.

The pension fund is looking to increase its exposure to core markets with high barriers to entry.

The Alaska Retirement Management Board manages $26 billion in assets for five of the state’s retirement plans, including the Public Employees’ Retirement System and the Teachers’ Retirement System.