The Nebraska Investment Council is planning to redeem its $167m (€151m) investment in the UBS Trumbull Property Fund and reinvest in another core open-ended fund, according to a board-meeting document.
The institutional investor’s real estate consultant The Townsend Group has recommended the move due to underperformance, which it attributed in part to the fund’s high exposure to retail property, including regional malls.
Nebraska Investment Council, which manages a number of state pension and retirement funds, will join a number of investors seeking to exit the UBS Trumbull Property Fund. As reported by IPE Real Assets last week, the $22.7bn fund’s redemption queue had reached $5.4bn at the end of September.
According to the board-meeting document, the fund has underperformed its benchmark by 157bps and 170bps, respectively, during the past 10 years and since 2006. The fund is in the fourth quartile of the ODCE index over the past one, three, five and 10 years.
Townsend said retail property values had declined by 21% during the second quarter of 2019, contributing to negative return of -3.9% over the three months.
Townsend and Nebraska Investment Council are conducting a search for a replacement fund and expect to make a recommendation at a board meeting in February next year.
Nebraska Investment Council is invested in three other core real estate funds: $207.4m in PGIM Real Estate’s PRISA, $130.5m in Barings Core Property Fund, and $108.4m in Clarion Partners’ Lion Properties Fund.