UNITED STATES - Nebraska Investment Council is expected to put money in the secondary real estate market next month on behalf of its pension fund, and may make a $25m (€17.9m) investment in a Landmark Partners fund.
Jeff States, state investment officer for Nebraska, said: "Our retirement board and our consultant, Ennis Knupp & Associates, believe there are many investors looking at selling their existing positions in commingled funds. These interests can be purchased at a discount. And the end result is an interesting investment opportunity."
US pension funds have become frustrated with the lack of control investors have had with the closed-ended commingled fund structure, and would instead prefer to be invested in a club fund, open-ended fund, REITs or separate account.
Landmark entered the secondary market business in 1996 and has since formed four secondary market funds worth more than $1.7bn in value. The company has acquired over 120 real estate interests through secondary market transactions.
Nebraska established a 5% targeted allocation to real estate in 2004 and currently invests $271.4m or 3% of its total plan assets in the asset class through a mixture of core, valued-added and REIT investments.
The pension fund will also be taking another look at its REIT portfolio later this year to see whether it should maintain it on a long-term basis.
Nebraska officials recognise the REIT market performed better in the second half of 2009 but the pension fund needs to determine whether the REIT market is too volatile for its overall investment strategy in real estate.
Nebraska has now invested $53.5m or 20% of its real estate allocation in domestic REITs. Heitman runs a $16m portfolio and Goldman Sachs oversees $37.5m worth of assets.