UNITED STATES – Maine Public Employees Retirement System (Maine PERS) is considering changes to its lineup of core open-ended fund managers, following a recent board meeting.
The fund's real estate consultant, ORG Portfolio Management, gave a presentation at the 8 August board meeting, which recommended Maine reduce its commitment to PRISA and J.P. Morgan Strategic Property Fund and consider new allocations to the USAA US Government Building Fund, Heitman America Real Estate Trust, Prologis U.S. Logistics Fund, AEW Core Property Trust and Invesco U.S. Income Fund.
ORG noted that the average one-year gross of fees income return for the core open-ended fund universe was 5.79%, according to data compiled by the consultant through March 2013, compared to PRISA's return of 5.33% and 5.23% offered by the Strategic Property Fund.
ORG wrote in a document presented at the meeting that it recommended continued investment in defensive real estate opportunities that generated high income and low volatility.
However, ORG's recommendations are not binding and the fund's board of trustees had not set a timetable for when a final decision might occur.
Maine PERS has invested with PRISA since June of 2005, when it initially committed $90m (€74m). It has since re-invested $28.8m of cashflow garnered by the vehicle, and its share was valued at $108.2m as of the end of 2012.
The fund initially committed $130m to the Strategic Property Fund a year after its PRISA agreement, in June 2006. It has re-invested cashflow of $44m into the fund, leaving its share of the fund valued at $156.3m.
The last new real estate commitment made by the pension fund was a $25m commitment into the High Street Real Estate Fund IV, focused on investing in value-add industrial properties on the East Coast of the US.
Maine PERS still has the ability to increase its real estate holdings. Current total market value and unfunded commitments for real estate stand at $928.3m, representing 8.1% of its $11.4bn in assets – leaving the fund with $213m to invest before it reaches its 10% targeted real estate allocation.