NORTH AMERICA – The Alaska Permanent Fund Corporation has earmarked approximately $300m (€233m) to invest real estate after it increased the maximum leverage allowed in its real estate portfolio from 25% to 35% and adding a 50% leverage maximum on any one property.
Mike Burns, executive director for Alaska, said: “We have seen how low the current interest rates are now, and we wanted to take advantage of this situation.
“This will also give us the opportunity to invest some more capital into the market.”
Alaska is now speaking with various lenders about adding more debt to part of its real estate portfolio.
The interest rate on this new debt is expected to be in the low to mid 3% range.
The pension fund has chosen 10-12 properties where the new debt will be added.
These assets include a mixture of office, industrial, retail and apartments it owns across the US.
The properties are all core assets, which the pension fund believes should attract interest from traditional lending sources.
Alaska defines core assets as properties that are at least 80% occupied and 10 years old or less.
Alaska has owned the properties through its separate account real estate managers on a direct basis.
These include CBRE Global Investors, LaSalle Investment Management, CS Capital Management, L&B Realty Advisors and Sentinel Real Estate Corporation.
Burns said: “Our investment plan is to try to re-invest the capital from the new debt into real estate. There is no guarantee at this time this will happen.”
Alaska has a real estate portfolio valued at $5.3bn, as of the end of April, amounting to 11.2% of its $47.4bn in total plan assets.
The targeted allocation is 12%.