UNITED STATES - The Ohio Public Employees Retirement System has issued Requests for Information (RFI) concerning separate account managers working in the residential apartments and first mortgage loan portfolios space.
Pension fund officials said Ohio is looking to create the discretionary accounts to further diversify its portfolio and capitalise on market opportunities.
It is anticipated the fund will allocate approximately $300m (€218.2m) to each account over the life of the relationship.
Residential properties is a sector which many US pension funds believe will come back ahead of the major commercial property types.
Once the economy starts to improve, the income stream of an apartment complex can be improved faster through shorter leases in comparison to office and industrial properties which carry longer-term leases.
Ohio's US residential property separate account would be expected to cover all levels of risk so is likely to purchase existing core assets as well as investment in the development of new apartments and the repositioning or redevelopment of existing properties.
Semi-finalists for the account will be contacted at the end of March and a final decision will then be made by the end of April.
Ohio PERS already invests in residential properties as it has an existing multifamily portfolio separate account valued at $467m.
Elsewhere, however, there is still a lack of debt in the marketplace and many lenders and investors are still sitting on the sidelines. So Ohio PERS hopes to take advantage of this situation by a hiring a manager to build a first mortgage loan portfolio strategy.
This will be a new investment strategy for the pension fund so it will consider two directions: to buy current loans on existing properties and look at the possibility of writing new loans on traditional real estate in office, industrial, retail and apartment spaces.
Ohio PERS will select semi-finalists for this account on 2 April and notify the winner by the end of April.
Pension fund officials believe they can achieve the sort of returns seen on core plus strategies, based on a 5-10-yr holding period.