Indiana Public Retirement replaces consultant, drops EII

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  • Indianapolis

Indiana Public Retirement System (INPRS) has replaced its real estate consultant and dropped EII Capital Management from a $55m (€60.6m) mandate.

Mercer Investment Consulting has been chosen to take over from ORG Portfolio Management, with Courtland Partners and Callan Associates coming close.

According to board meeting documents, the pension fund also fired EII as the manager of its global real estate investment trust (REIT) strategy due to performance and staff turnover.

INPRS has become at least the fourth public pension fund in the US to drop EII within the past 30 days. The other three are Los Angeles County Employees Retirement Association, San Francisco Employees’ Retirement System and San Diego City Employees’ Retirement System.

The capital invested in the $55m REIT programme will be applied to an overall portfolio rebalancing.

According to documents, Mercer has recommended making new allocations to core real estate funds, in addition to its existing investments in the Harrison Street Core Property Fund and the Stockbridge Smart Markets Fund.

The consultant has also suggested that capital could be invested in real estate funds targeting real estate in Europe and Asia, providing an additional layer of diversification and the potential for higher returns.

It has also recommended considering further investments in REITs, enabling exposure to international markets with greater liquidity.

The pension fund has not yet determined how much capital will be invested in real estate for the 2015 fiscal year.

It confirmed to IP Real Estate that it was significantly below its 7.5% target allocation to the asset class at 5.1%.

The vast majority (92%) of the pension fund’s real estate assets are in the US, with 8% international. The portfolio is 43% core, 30% value-add and 27% opportunistic.

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