The Alaska Retirement Management Board is planning to take $100m (€89.2m) out of REITs and place it into the UBS Trumbull Property Fund.
The pension fund, in a board meeting document, said it was making the move on the recommendation of its real estate consultant, the Townsend Group.
The pension fund is overweight public real estate, with 81% of its portfolio invested in private real estate and 19% in public, compared with a target of 90% private and 10% public.
Townsend wrote in a board-meeting document that a partial transfer of assets should be made from public to private core real estate within this portfolio.
It said UBS was a reasonable option for low-risk, low-leveraged core real estate.
The pension fund said the leverage component in the Trumbull fund was relatively low at 15.6%.
Alaska sees benefits from the fund, as it provides large asset exposure, which is not practical using the pension fund’s separate accounts relationships.
The UBS Trumbull Fund, which has a gross asset value of $22.8bn, has made 224 investments in the office, apartments, retail, industrial and hotel sectors.
Alaska was already an investor in the Trumbull fund before the new $100m commitment, having invested $98.6m in the second quarter of this year.
The pension fund’s total REIT portfolio is valued at $351.4m.
Alaska’s investment in UBS will be the only real estate commitment planned for the 2017 fiscal year.
The pension fund said staff would continue to explore value-add and opportunistic real estate investments.
The higher risk/return strategies are not a strategic focus for the portfolio but could present attractive investment opportunities, it said.
KKR’s next real estate fund will be considered, along with other funds.
1 Reader's comment