The $35.8bn (€29.1bn) Iowa Public Employees Retirement System (IPERS) has increased its allocation to private real assets from 7.5% to 8.5% as part of an annual asset allocation review.
The pension fund said in a meeting document that its private real assets portfolio as of November 2020 was $2.1bn, or 5.6% of the pension fund’s total assets.
The new real assets allocation increase represents a $1bn shortfall — an amount which will mainly be used to target real estate and infrastructure investments.
The pension fund’s real assets portfolio currently includes investments in real estate, timber and farmland.
IPERS, which was in talks to hire Brookfield as its first infrastructure fund manager, said it has earmarked its first entry into the asset type for 2021 by issuing a $300m commitment to Brookfield Super-Core Infrastructure Partners, an open-ended global fund which targets energy, power, utilities and transportation assets.
As previously reported, IPERS initially plans to allocate $500m to private infrastructure.
In 2021, the pension fund expects to consider non-traditional property types like single-family rental housing, data centres, cold storage industrial and life-science related real estate. It said the private real estate investing will be funded by sales proceeds from the existing portfolio and new commitments on a case-by-case basis to help the allocation shortfall in the private real assets.
The pension fund’s current real estate separate account managers include Clarion Partners with a $462.2m portfolio, Invesco with a $450m portfolio, RREEF managing $592.4m and UBS Realty Investors managing a $352m portfolio.
The pension said “given current pricing and the macro-environment” it does not intend to make a further commitment to its $150m timberland separate account with Forest Investment Associates.
IPERS said UBS Farmland Investors has invested $59.3m of the pension fund’s initial $150m allocation and UBS plans to invest up to $30m of the remaining unfunded commitments in 2021.
To read the digital edition of the latest IPE Real Assets magazine click here.