Alaska Permanent Fund Corporation could lower its allocation to real estate from the current 13% to 11% as part of possible changes to the sovereign wealth fund’s asset allocation mix.
Alaska Permanent disclosed in a meeting document, that the rationale behind the proposed changes, potentially starting in 2025, comes from their belief that real estate has become a less attractive investment compared to 12 months ago.
The proposed asset allocation, if approved, would simplify Alaska Permanent’s real estate investment strategy. Real estate investment trusts (REITs) and their benchmark would be eliminated, with the NCREIF NPI Index becoming the sole reference point for real estate performance.
Alaska Permanent’s REIT portfolio was valued at $968m (€893m) as of the end of 2023, representing 12% of the sovereign wealth fund’s $8.2bn real estate portfolio.
The remaining assets in the real estate portfolio consist of 81% in real estate equity valued at $6.68bn and 7% of real estate debt valued at $599m.
Alaska Permanent started to reduce its exposure to REITs in the first quarter of this year when it redeemed $200m from its existing REIT portfolio.
During the period, the sovereign wealth fund also approved and funded close to $550m in credit lines secured by individual properties.
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