Mass PRIM plans new REIT manager search

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Massachusetts Pension Reserves Investment Management Board is looking for a REIT manager to replace EII Capital Management.

The pension fund ended its REIT separate account with EII Capital in October of last year. The portfolio, which has a current value of $479m (€420m), was transferred to Invesco Real Estate on a temporary basis.

Tim Schlitzer, senior investment officer and director for real estate and timber for Mass PRIM, said the search will also allow the fund to “look at the entire REIT universe from a product stand point”.

Global, US-only and individual property-type strategies will be considered.

The pension fund is also continuing to consider investing in unlisted core European real estate for the first time.

Mass PRIM will conduct the search with its real estate consultant, The Townsend Group.

The pension fund is also continuing to consider investing in unlisted core European real estate for the first time. It might do this through existing separate account managers in the US or by hiring new managers based in Europe.

“We are considering this as we think the strategy would give us a good level of diversification from our US portfolio,” Schlitzer said. “The region is very attractive from a pricing perspective.”

In the US, Mass PRIM will commit $100m to internally managed and co-investment opportunities with two managers of its non-core strategies, DivcoWest and The Carlyle Group.

But the pension fund will not be allocating new capital to its core separate account managers this year.

“We are very close to our 10% targeted allocation for real estate, now at 9.9%,” Schlitzer said. ”These managers have $800m of capital from the previous year to invest going forward.”

The pension fund is planning to sell $600m of property this year, the proceeds from which will be made available to its separate accounts managers AEW Capital Management, Invesco Real Estate, JP Morgan Asset Management, LaSalle Investment Management and TA Associates.

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