UNITED STATES - The New York State Teachers Retirement System has signed new contracts with BlackRock Financial Management and ING Clarion Capital to manage commercial mortgage_backed securities (CMBS) investments.
Both contracts were set to expire within the next month but have now been extended for another 12 months.
BlackRock manages a CMBS portfolio for the pension fund valued at $407.76m (€301m)
to the end of 2009 while the portfolio managed by ING Clarion was worth $336.03m in the same period.
The pension fund's CMBS portfolio has produced some very attractive returns over the past 12 months as the BlackRock assets delivered 26.56% and ING Clarion's activity yielded 35.66%.
Both CMBS managers sought assets in the core US market but the pension fund could investment more capital in mortgages and equity real estate in 2010 of it wishes.
The total value of its mortgage portfolio was $5.5bn to the end of September 2009, representing 6.7% of its 8% targeted allocation to mortgages.
The pension fund has a real estate equity portfolio valued at $6.7bn, worth 8.4% of its total plan assets in the asset class, against a 10% target allocation.
The US CMBS market is attracting pension fund capital for the super senior-grade investment products, however most pension funds hold CMBS as part of their fixed-income asset class.
The pension funds that are investing in CMBS products as real estate are selecting AAA-rated placements carrying a fraction more risk involving some recapitalisation of distressed debt.