UNITED STATES - Massachusetts Pension Reserves Investment Management Board has approved its 2010 annual real estate investment plan and could allocate as much as $1bn (€729.7m) to the asset class over the next 12 months.

The largest part of this capital, worth up to $800m, is likely to be placed in core real estate, according to pension fund officials.

Tim Schlitzer, senior investment officer for real estate and timber at Mass PRIM, said: "We think core real estate will produce the best risk-adjusted returns in comparison to the other risk levels."

Officials are hoping to return 7-8% through a US core real estate strategy, and all four property types are being considered: office, industrial, retail and apartments.

Industrial assets in particular could get more play as Mass PRIM is currently underweighted to this property type. And from a geographical perspective, the pension fund is overweight assets in New York City.

Capital is likely to be invested through existing core separate account managers - Invesco, JP Morgan Asset Management, LaSalle Investment Management and TA Associates - on a first-come, first-served basis.

RREEF is unable to compete for the new capital, despite being an existing manager to Mass PRIM as it is already at its $700m capital under management limit for the pension fund.

Mass PRIM and its consultant, Callan Associates, have also approved a 5% allocation to its value-added programme, worth roughly $200m, to give the pension fund additional diversification within its real estate portfolio and the chance to achieve higher returns.

The pension fund already has a value-added strategy as Mass PRIM told RREEF in 2008 that its remaining $253m commitment was being frozen for value-added.

Callan is likely to assist the pension fund with a manager search later this year, however, it has yet to be decide whether assets will be invested in commingled funds or separate accounts.

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