New Mexico PERA shakes up REIT manager lineup

The Public Employees Retirement Association of New Mexico has altered its REIT manager lineup involving five managers.

The US pension fund is ending its relationships with REIT managers LaSalle, Morgan Stanley, and BlackRock from the end of March this year.

New Mexico PERA has a REIT portfolio valued at $256m.

LaSalle oversaw a US-REIT portfolio valued at $110m, while Morgan Stanley managed a global portfolio at $100m.

BlackRock managed a passive US strategy valued at $46m.

Kristin Varela, portfolio manager of real returns for the pension fund, said: “After doing our REIT manager search, we believed there were other firms available to us that could perform better than our previous managers.”

The pension fund has hired Dimensional Fund Advisors and Security Capital Research & Management as its new REIT managers.

“We felt that these managers we selected have strategies that we feel very comfortable [with] going forward,” Varela said.

Each of the new managers will be awarded a $140m (€132.5m) allocation. Both managers will have investment discretion.

Dimensional Fund Advisors will have a global investment strategy to place capital in the marketplace on a semi-passive strategy, benchmarked to the S&P Global Index.

Security Capital is being hired as a domestic REIT manager and will have a core-like, conservative investment strategy.

Its benchmark will be the NCREIF ODCE Index, with the investment goal to beat the benchmark by 100 basis points.

New Mexico PERA has also hired CenterSquare US Real Estate Securities as a “bench” manager.

The actions taken by the pension fund were the final results of a REIT manager search started in November last year.

A total of 32 managers responded to the RFP, conducted with the pension fund’s investment consultant, Cliffwater. LaSalle was a semi-finalist in the search.

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