Massachusetts Pension Reserves Investment Management Board is looking to reduce the costs of debt used on its $7.6bn (€6.42bn) real estate portfolio by expanding the sources of financing it can use.
The pension fund told IPE Real Assets that it can now consider the use of general collateral financing, repurchase agreements, futures contracts and total-return swaps.
It was previously restricted to mortgages, bank loans, private notes and internal financing through a securities lending programme.
The move is hoped to bring down the overall cost of leverage by up to 100bps annually and give the pension fund the option to increase its leverage capacity in needed.
The change applies to assets owned directly and those held through separate accounts with third-party fund managers.
The pension fund had placed a total value of its real estate portfolio at $7.6bn (€6.4bn), according to a report issued by Mass PRIM for the end of May 2021.