Oregon Public Employees Retirement Fund is planning to invest $1bn (€784.6m) in real estate next year and might drop EII Capital Management.
The pension fund will make a decision in the coming weeks on whether or not to terminate its $80m REIT separate account managed by EII. Should it make the move, it would follow a number of pension funds that have fired the manager in recent weeks.
Tony Breault, senior investment officer for real estate for the pension fund, said he expected real estate commitments for 2015 to match those made this year.
Oregon PERF is looking for two new separate-account joint ventures worth $200 to $300m each to invest in apartments and retail property.
A new value-added apartment strategy would complement the pension fund’s existing core apartment relationship with General Investment & Development.
Oregon PERF is considering a value-added retail strategy, focusing on necessity stores and grocery-anchored properties. The strategy would augment the fund’s core separate account with Regency Centers.
Oregon PERF is also looking at two additional fund commitments for this year, considering a mezzanine debt fund and an alternative/niche fund. Total commitments would be between $400m and $500m.
Oregon PERF is also in the early stages of exploring a pan-European separate account to invest in value-added retail and industrial properties.
The pension fund recently approved a new $100m allocation to the Landmark Real Estate Secondaries Fund VII.
“We have been following them for a long time and we really believe in their strategy of buying limited partnership interests in commingled funds,” Breault said.
“This gives us a chance to see exactly the kind of real estate that managers will be investing in rather than be in a blind-pool arrangement.”
Fund VII, which originally had a hard equity raise cap of $1.3bn, has targeted returns of 20% gross and 17% net IRR. The manager might ask limited partners to allow for more capital to be raised.