The Virginia Retirement System has created an internally managed real estate investment trust (REIT) strategy as it ends a $497m (€420.6m) Morgan Stanley managed relationship.

The $76.9bn pension fund said it has terminated the Morgan Stanley managed global ex-US investment REIT strategy and created a $500m in-house managed REIT mandate.

The newly created portfolio will maintain the FTSE EPRA/NAREIT Developed Index as its benchmark and will have a non-US passive management strategy.

Virginia Retirement did not comment on the decision to the REIT contract, but according to its annual report one-third of its assets are managed in-house, saving it approximately $52m in external management fees annually.

Virginia has expanded its US industrial exposure in the private portion of its real estate portfolio via a $135m allocation to a joint venture with the Carson Companies.

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