Florida State Board of Administration (SBA) plans to commit $1.4bn (€1.3bn) to real estate this year, mainly targeting residential assets, which are currently underallocated within the portfolio.
The Townsend Group, Florida SBA’s real estate consultant, disclosed in the pension fund’s meeting document that residential assets make up 22.6% of the real estate portfolio compared to the NCREIF ODCE Index benchmark of 29.3%.
The consultant recommends reducing office asset holdings, which at 20.3% of the real estate portfolio, exceeds the benchmark’s 16.9%.
Florida SBA’s real estate portfolio which is valued at $18.9bn, represents 9.3% of its total plan assets compared with an allocation target of 12%.
The pension fund’s investment plan during the period involves allocating new capital to the core real estate portfolio through asset purchases via separate account managers. The core allocation may include a mix of residential and increased exposure to alternative property types.
For non-core investments, the strategy is to place capital into funds or unique opportunities, targeting alternative sectors such as residential, digital infrastructure and global supply chain opportunities.
Over the past year, Florida SBA divested its real estate investment trust portfolio for $2bn and issued two redemptions totaling $209m from its core open-ended portfolio.
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