US -The Dallas Police and Fire Pension System has invested in a $4bn (€3.01bn) state of the art highway infrastructure system in Dallas, bolstering domestic investments.
The US pension fund has joined LBJ Development Partners to become a $445m equity partner in the I-635 Managed Lanes Project, which involves expanding and rebuilding a large transportation system.
Steve Shaw, vice chairman of the pension fund's Board of Trustees, said: "What we've done at the Dallas Police & Fire Pension System is a model for the nation in using public pension funds to help build highway infrastructure.
"The investment by our police officers and fire fighters in the I-635 Managed Lanes Project will provide jobs, improve transportation, and reduce congestion, fuel consumption and pollution," he added.
Construction is expected to take around five years to complete.
According to the pension fund, LBJ Development Partners won the contract for the project because their proposal offered the best value and largest return on the investment of taxpayers' money.
According the Dallas Police and Fire Pension System's latest annual report, its target allocation to real estate is 20% and is actual allocation is 20.7%.
The pension fund invests in retail, industrial, office and multi-family properties and undeveloped land in the United States. It also invests in Real Estate Investment Trusts (REITs).
The 2007 annual report showed the pension fund was valued at approximately $3.4bn and had nearly 8,400 members.
A report released by Partners Group entitled ‘Infrastructure - defensive portfolio diversification', looks at infrastructure as a defensive asset class and suggests that in times of rising inflation, infrastructure assets profit from increased global trade and passenger volume and tend to outperform bonds.
According to Partners Group, infrastructure can help protect investors from accelerated inflation as they are backed by real assets and can put in place tariff structures that adjust to the annual consumer or retail price index.
According to the report, governments are very supportive of infrastructure debt and are increasingly backing the financing of private infrastructure to boost the economy without directly investing.
The European Investment Bank, for example, plans to increase its infrastructure financing up to €6bn per year.
Partners Group's research suggested the drop in values coupled with the potential revenue and cash flow stability make infrastructure an attractive investment opportunity in the current market conditions.
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