The Alaska Retirement Management Board is planning to take $100m (€89.2m) out of REITs and place it into the UBS Trumbull Property Fund.

The pension fund, in a board meeting document, said it was making the move on the recommendation of its real estate consultant, the Townsend Group.

The pension fund is overweight public real estate, with 81% of its portfolio invested in private real estate and 19% in public, compared with a target of 90% private and 10% public.

Townsend wrote in a board-meeting document that a partial transfer of assets should be made from public to private core real estate within this portfolio.

It said UBS was a reasonable option for low-risk, low-leveraged core real estate.

The pension fund said the leverage component in the Trumbull fund was relatively low at 15.6%. 

Alaska sees benefits from the fund, as it provides large asset exposure, which is not practical using the pension fund’s separate accounts relationships.

The UBS Trumbull Fund, which has a gross asset value of $22.8bn, has made 224 investments in the office, apartments, retail, industrial and hotel sectors.

Alaska was already an investor in the Trumbull fund before the new $100m commitment, having invested $98.6m in the second quarter of this year.

The pension fund’s total REIT portfolio is valued at $351.4m.

Alaska’s investment in UBS will be the only real estate commitment planned for the 2017 fiscal year. 

The pension fund said staff would continue to explore value-add and opportunistic real estate investments.

The higher risk/return strategies are not a strategic focus for the portfolio but could present attractive investment opportunities, it said.

KKR’s next real estate fund will be considered, along with other funds.

Topics