Oregon Public Employees Retirement Fund (OPERF) could spend up to $850m (€687m) on real estate as part of its 2018 investment plan.
Anthony Breault, a senior investment officer for the Oregon Investment Council, said: “There is no guarantee that all of this capital will be placed with managers this year. Some of the capital decisions could be spilled over to next year.”
The pacing plan includes $550m for separate accounts and $300m for open-ended funds.
One of the initiatives will be to hire a manager for a core-plus separate account.
“We see that this strategy as one where the manager will be taking a little more operational risk than you would see with a core relationship. In return for this risk, we would expect to achieve a higher income return,” said Breault.
Another will be to invest in open-ended funds with core-plus, niche or sector-specific strategies. Specialised property types could include medical office, student housing, senior living and self-storage.
“The major benefit of this strategy is diversification,” said Breault. “Another factor is that investing in those property types will allow us to achieve a return that would be 100bps higher than when investing in the four traditional property types of office, industrial, retail and apartments.”
OPERF is planning to review its $590m industrial real estate separate account, which has been managed by Lincoln Property Company for 16 years.
“We make sure that we evaluate all the managers that have expertise with this property type before making a decision to re-up with the manager,” Breault said.