Oregon Public Employees Retirement Fund (PERF) has terminated its porfolio of shopping-mall real estate investment trusts (REITs) which had been managed by Cohen & Steers for 20 years, according to a board meeting report.
The portfolio, which was valued at $261m (€232m) at the end of September 2019, held investments in three REITs: Simon Property, Taubman and Macerich. This was reduced to two after Simon announced last month it was acquiring Taubman.
Tony Breault, senior investment officer for the Oregon State Treasury, which oversees the investments for Oregon PERF, said: “This relationship held investment in two REIT securities. Both of these companies were in the regional mall ownership business and we know the struggles this property type is going through.”
The Cohen & Steers mandate had been in existence since 2000 and had generated an internal rate of return of 18.7% since inception.
Cohen & Steers declined a request for comment.
In 2016, Oregon PERF began reducing its exposure to REITs in favour of open-ended core property funds.
It still employs LaSalle Investment Management to manage a $261m diversified REIT portfolio.
The pension fund is not moving away from retail completely. It has a $439m investment relationship with Regency Centers and is considering investing in US grocery-anchored and necessity-oriented retail.
The board meeting report also shows Oregon PERF approved $250m worth of commitments to two new open-ended US apartment funds in which it is a lead investor.
The pension fund made a $150m commitment to the GID All Weather Fund and $100m to the Nuveen US Cities Multifamily Fund.
The commitments are part of its plan to invest up to $1.4bn in real estate in 2020.
“We are a lead/founder investor in both funds and we will be given a lifetime fee break that last for perpetuity,” said Breault.
“Both of them will give us diversification as to the type of apartment assets that we have in our portfolio now.”
The GID fund will look to acquire B-quality US apartment complexes, while Nuveen will be targeting A and B-quality, assets designed for middle-income renters.