Arizona State Retirement System plans to sell or restructure real estate investments worth about $4.1bn (€3.8bn) over the next two years, to help generate profits from investments that are deemed non-essential, underperforming, and overvalued as well as bring its property exposure back in line with its target.
The pension fund’s real estate investment consultant RCLCO Fund Advisors disclosed in a meeting document that the property disposal plan involves selling $3bn worth of assets directly to new owners, and using the remaining $1.2bn worth of assets to seed two unnamed open-ended funds.
Part of the reason for the proposed sale of some of Arizona Retirement’s existing properties is that it wants to reduce the size of its real estate portfolio from its current 20% of total plan assets to 17%, which is its target allocation for real estate investments.
Some of the sale proceeds will be used to fund new investments.
Arizona Retirement plans to focus on property types that have strong long-term demand drivers, such as multifamily housing, purpose-built single-family rental properties, senior housing, industrial facilities, data centres, and next-generation office and health sciences workspaces.
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