Louisiana Teachers invests $400m to meet 2% REIT allocation
The Teachers’ Retirement System of Louisiana is investing $400m (€338m) in real estate investment trusts (REITs) via Brookfield Investment Management and Dimensional Fund Advisors (DFA).
The pension fund will allocate $200m to each manager.
The capital will allow the pension fund to reach its first ever targeted allocation to REITs of 2%, which it put in place late last year.
The two managers will have full investment discretion within the stipulated investment stategy for both to invest in REITs on a global basis.
The benchmark to be used by both REIT managers is the EPRA/NAREIT Developed index.
The decision to hire Brookfield and DFA was based on the recommendation of the pension fund’s investment consultant, Aon Hewitt.
The consultant wrote in a board meeting document that Brookfield was among the top-performing managers in the REIT space, having achieved net returns of 4.3% for one year, 5% for three years, 10.4% for five years and 12.5% for seven years.
The manager had $4.4bn in assets under management in its REIT portfolio at the end of June this year, including holdings in 52 different trusts.
The biggest exposures on a property-type basis in its current portfolio are offices, with a 28% slice, retail at 21% and residential at 16%.
DFA, meanwhile, oversees a REIT portfolio valued at $6.7bn at the end of June, with 25% in retail and 14% in both office and diversified REITs.
The portfolio is broadly diversified by country, industry and market capitalisation.
Louisiana Teachers’ search for REIT managers was approved in June.
The other two finalists in the search were AEW Capital Management and Principal Real Estate Investors.