GLOBAL - The State Board of Investment of Florida (SBA) is planning to invest as much as $1bn (€740m) in real estate within the next 12-24 months.
 
The pension fund will increase its investments in the property market to bring up its asset allocation target from 6.5% to 7%, according to spokesman Dennis MacKee.
 
He told IPE the new investment was "in anticipation" of the growth in the total net asset value, although he conceded it was a "work plan and not a certainty".

Fund assets total $128.5bn as at 30 June, representing a $700m increase since last quarter.
 
Asked whether the scheme would invest in offshore property markets, MacKee said: "We will look for opportunities in overseas funds."

The investment will be in direct, joint ventures and real estate funds, he said.

Meanwhile, during the first half of 2011, SBA transitioned its public portfolio from a domestic to a global portfolio.
 
The investment plans were announced at SBA's quarterly board meeting earlier this week.

The fund's real estate investment adviser, the Townsend Group - which is helping find real estate funds - noted in its real estate industry review presented during the quarterly meeting that "real estate recovery has been supported by stabilisation in fundamentals, but has not been driven by their recovery".
 
Real estate looks more attractive than fixed income as the industry recovered from the troughs, it added.

"On a relative basis, real estate can provide long, durable income streams, which are attractive in slow/no growth environments," the Townsend report continued. "If you are invested, continue to hold."
 
In terms of performance, SBA's five-year performance ranked in the 97th percentile when compared against its peer group (of 60 real estate investors.)
 
According to the Townsend Group, 73.4% of SBA's real estate investments are in core, followed by public (12.9%), value-added (9.8%) and opportunistic (3.8%).

In terms of management, 51.9% are principal investments, while 48.1% are externally managed.

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