UNITED STATES - Massachusetts' Pension Reserves Investment Management Board has decided to drop a small cap investment mandate for its publicly-traded real estate securities program in the United States.

Lou Canlas, senior investment officer for real estate and timber at the pension fund, said
Mass PRIM has decided to pull its $70m (€49.4m) assets out of the small cap mandate managed by LaSalle Investment Management.

"We made this decision based on return factors.  The mandate was not able to meet the NAREIT return benchmark."

She added: "We still believe in LaSalle as a manager of REIT assets. We will consider them in our future REIT investment plans."

Industry REIT experts are of the opinion the small cap mandate can still be an effective strategy for some institutional investors, but Mass PRIM took this action on its REIT strategy at its October 2 board meeting, assisted by real estate consultant The Townsend Group.

The pension still has a very active domestic REIT investment program through mandates with Wellington, RREEF, Urdang and INVESCO.

Moreover, there is a good possibility the capital from the small cap mandate will eventually be transferred into Mass PRIM's global REIT manager search.

This would increase the capital for this search from $200m to $270m, although a final decision on this has yet to be made.

Mass PRIM is still reviewing responses to the global REIT RFP and a final decision on manager selection will be made by the end of 2007 at the earliest.