UNITED STATES - New Jersey Division of Investment will be looking at investing as much as $2bn (€1.38bn) in real estate for 2008.
The pension fund will have a final vote on its annual investment plan in February but it is expected to include two new strategies in real estate.
One of these is to create a real estate co-investment fund invested directly in real estate opportunities sourced and managed by local US real estate firms.
This would be a significant change for the real estate portfolio, as the pension fund has mostly invested with national real estate managers but these investments have typically involved managing large pools of capital on a national stage and forced them to focus on a narrow subset of real estate opportunities.
This kind of investment approach has not allowed the pension fund to participate in smaller local opportunities until now, but New Jersey believes the smaller deals will lead to an improvement on returns for its real estate portfolio and greater diversification overall.
Structure of this program will be similar to its Lehman NJ private equity program which allows the local manager to raise the majority of capital from other sources while the co-investment fund manager independently validates the investment case for each property.
The other new strategy is to have a modest exposure to domestic public Reits of around 1%, or $800m, of New Jersey's total plan assets - a program which would be internally managed by New Jersey investment staff to closely track the NAREIT index.