UNITED STATES – Kansas Public Employees Retirement System is planning to invest $295m (€219m) in real estate in 2014, approximately $170m of which will constitute core investments.
The decision is part of the pension fund’s efforts to reach its target allocation of 11% at a time when it is selling assets from its separate account portfolio and from mature non-core real estate funds.
According to board meeting documents, the new core commitments will include a $125m investment in the JP Morgan Strategic Property Fund.
The pension fund board is also considering committing $50m to the Morgan Stanley Prime Property Fund.
The Townsend Group, which is advising Kansas PERS, believes that non-core strategies offer the potential for attractive risk-adjusted returns. The pension fund is planning to make three commitments to non-core pooled funds in 2014 with a minimum ticket size of $35m.
Over the longer term, Kansas PERS plans to invest $127m in non-core strategies in 2015 and $130m in 2016.
Montana Board of Investment is another institutional investor increasing its exposure to non-core strategies.
It has committed $25m to DRA Growth and Income Fund VIII and $30m to the BPG Investment Partnership IX as part of its value-added real estate allocation.
The fund managed by DRA Advisors will buy existing buildings and improve them, as well as purchasing distressed debt, in the office, industrial, retail and apartment sectors in the US.
The fund managed by BPG Properties will invest in existing properties and development projects in the four main property sectors.