New Jersey Division of Investment expects to reduce its exposure to opportunistic real estate strategies as it plans to invest up to $300m (€267m) in the asset class this year.
Hamilton Lane, the $77.5bn pension fund’s investment consultant, has recommended scaling back opportunistic exposure to limit portfolio volatility.
New Jersey said in a board meeting document that it wants to tilt its real estate allocation towards assets driven by structural demand shifts, such as industrial and experiential retail.
The pension fund has already proposed a $100m commitment to Exeter Property Group’s new core industrial fund. The manager expects to raise between $750m and $1bn for Exeter Core Industrial Club Fund III.
New Jersey said the industrial real estate market continues to benefit from the expansion of e-commerce, which has supplanted trade as the primary driver of new industrial real estate demand.
The pension fund is planning to increase its 6.83% target allocation to real estate to 7.25% in the future to help it target higher growth geographies like the western and southern regions of the US.
The pension fund also said it plans to move away from more cyclically linked assets like office buildings and hotels.