New Mexico pension fund to invest $400m in real estate by year-end

GLOBAL - The New Mexico State Investment Council is looking to make $400m (€302m) in real estate investments between now and the end of the year.

Vince Smith, deputy state investment officer at New Mexico, said: "We have this capital available to invest as we are seeking to get to our 10% targeted allocation for real estate by the end of 2012."

The pension fund will be investing the capital in a mixture of private and public real estate strategies. 

On the private side, this will be accomplished through commingled funds or separate accounts that have either value-added or opportunistic strategies. 

The public side will be hiring REIT managers that will invest the capital in publicly traded securities in the US.

The pension fund could be conducting these searches through an RFP or its real estate consultant, Cleveland-based The Townsend Group.

New Mexico approved two new private real estate commitments at its 24 April board meeting. 

One of these was a $35m commitment to the Lion Industrial Trust. This is an open-ended commingled fund - managed by New York-based Clarion Partners - that only invests in industrial properties. 

Smith said: "We had been a little under-allocated to industrial properties and felt the best way to catch up was to invest in a commingled fund that only invests in industrial properties."

The other commitment approved by the fund was a $75m allocation to PRISA, a core, open-ended commingled fund managed by Pramerica Real Estate Investors. 

"We invested $100m into this fund last year, and since then, we have achieved a 13% net return on that investment," Smith said.

"Because of this, we felt comfortable with making another commitment with them."
It will be a while before the latest commitment is called by Pramerica. 

The commingled fund has an entry queue of $635m. 

New Mexico is expecting that its latest commitment will not actually go into the fund until the first quarter of 2013.

The pension fund has a real estate portfolio valued at $635m as at the end of 2011, not including $400m of unfunded real estate commitments New Mexico hopes to get at least partially called sometime during 2012. 

Real estate covers 4.6% of its $13.8bn total plan assets for the same time period.