New Mexico SIC frees up $425m of new capital for core real estate [updated]

New Mexico State Investment Council (SIC) has reversed a plan to invest exclusively in non-core real estate during its current 12-month investment period, committing $425m (€383m) to funds managed by PGIM Real Estate and Clarion Partners.

IPE Real Assets reported last month that New Mexico SIC had decided to target non-core strategies to help reduce the core portion of its real estate portfolio from 60% to 55%.

But the sovereign wealth fund confirmed that it is investing $300m in PGIM Real Estate’s core fund PRISA and has approved a $125m commitment to the Clarion’s Lion Properties Fund.

New Mexico SIC, which manages a $26bn permanent endowment, said the change was because it had rebalanced its equity portfolio and taken over the management of the Tax Stabilization Reserve.

It is the first time in four years that New Mexico SIC has committed capital to core real estate funds and the organisation said a third commitment could follow within the next 12 months.

As reported previously, PRISA, the oldest pooled property fund in the US, has outperformed the NFI-ODCE index over most of the time periods.

PRISA has been lowering its exposure to office buildings through disposals and acquisitions, a move expected to help increase its exposure to apartment and industrial assets.

The $13.1bn Lion Properties Fund has consistently outperformed the ODCE index consistently over the past seven years, according to New Mexico SIC board meeting report.

The fund’s portfolio is overweight industrial assets and underweight the retail sector.


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