UNITED STATES - Some US pension funds are still willing to invest a portion of their capital in core real estate despite returns being at an all-time low, according to consultants Townsend Group.
Micolyn Yalonis, principal with Townsend, said Alameda County Employees Retirement Association has invested $150m (€111.4m) into three core commingled funds - the BlackRock Granite property fund, JPMorgan Asset Management strategic property fund and PRISA managed by Pramerica Real Estate Investors - in its pursuit of income.
"This pension fund has an income driven real estate strategy," said Yalonis.
"These three funds do deliver solid income returns. At the same time, we do recognize that returns for core real are at all-time lows," she continued.
All three commingled funds invest mainly in US leased office, industrial, retail and apartments, JPM's fund in particular producing a one-year income return of 5.49% and a three-year income return of 6.2% to June 30.
That said, the $5.2bn Alameda County pension fund is expected to diversify again and invest another of $20m-30m in real estate later this year in its bid to reach its 9% targeted allocation to real estate, according to Yolanis.
"This capital will be invested in a different strategy, for niche or unique investment funds in the market," she added.