UNITED STATES - Iowa Public Employees Retirement System has decided the only way it will be investing in real estate in 2008 is through reinvesting the sales proceeds from properties sold over the next 12 months.
The pension fund is currently over allocated to real estate, as through November 2007, Iowa PERS had a real estate portfolio valued at $2.11bn (€1.44bn), equating to around 9% of its $23.6bn of total assets - well above its 8% targeted allocation for real estate.
Iowa PERS figures it will have $254m of capital available to invest in real estate for calendar year 2008 while the total amount of sales proceeds for the year will be $315m. Those sales proceeds not reinvested will be held within the real estate portfolio to get it closer to its targeted allocation.
Capital for investment is being accessed by the pension fund's five separate account real estate managers - ING Clarion Partners, Invesco Real Estate, RREEF, TA Realty and UBS Realty Investors.
This commitment is to the asset class in general and not specific to any single manager so Iowa PERS will distribute the proceeds back to the managers, depending on performance, disposition activity and capacity at the manager and asset class level.
The capital could then be invested in a variety of property types, although the bulk are likely to be core transaction as up to 5% of the portfolio can be placed in value-added real estate while the fund does not have a real estate investment mandate for opportunistic.
It is understood Iowa PERS will consider investments in apartments, office buildings, shopping centres and industrial properties as exposure for each of these property types could be between 10% to 40% of the pension fund's private real estate portfolio.