REAL ESTATE - The $7bn Montana State Board of Investment will be making a move into real estate for the first time in several years this month.
The pension fund has a board meeting on April 26. At this meeting the board will discuss a minimum real estate allocation of 5% of its total assets.
Carroll South is the executive director at the pension fund. He said: “We think that a move into real estate in a larger way will make sense for diversification reasons. It will also allow us to achieve higher returns on a portion of our portfolio.”
Montana State now holds a real estate portfolio that amounts to less then a half percent of its total assets. The pension did invest in REITs in the late 1990s. It also owns some local office buildings.
The allocation that it’s talking about would mean an initial investment capability of at least $350m in real estate. The pension fund got the idea to plan a real estate strategy from its consultant, R.V. Kuhns & Associates. The person working on the Montana account is its President Becky Gratsinger.
Most pension funds start out a new allocation with a commingled fund strategy. This could mean committing capital to commingled funds that have a core or value-added strategy. A separate account investment plan is something that is considered down the road.
Montana State currently has placed its investment portfolio in three asset classes. These are domestic and international stocks, domestic fixed income and private equity.