UNITED STATES - Ohio Public Employees Retirement System has approved an annual real estate investment plan for 2009 which will see some fresh investments but will eventually lead to more properties being disposed of.
The pension fund will spend $387m (€277.9m) next year on acquisitions of US apartments, industrial, office and retail properties through its separate account managers but will also get rid of $574m of its private real estate programme.
Their existing managers will be allocated an estimated $125m to continue the development, redevelopment and repositioning of some of the existing assets that the pension fund owns.
That said, Ohio PERS has temporarily suspended making any new commitments to opportunity funds for the time being as, in the long-term, pension fund officials want to tilt the real estate programme towards opportunistic investments which is are thought to have better risk and return characteristics.
The Townsend Group, the pension fund's real estate consultant, wants real estate investment staff to research new investment ideas and meet with potential managers in anticipation of a recovery in the capital markets, as the Ohio PERS fund is projected to be worth $5.1bn by the end of this year.
Once this happens, it's expected Ohio PERS will commit $225m-$275m a year to opportunity funds.
In order to achieve these changes, the pension fund is planning to reduce its exposure to open-ended commingled funds by around $160m next year, and this would in turn reduce the amount committed or invested in this sector to around $820m.
It also has a new major imitative for public real estate as there are plans afoot to hire external managers to look after $600m in non-US international REITs.
Up to $250m could be deployed for this programme during 2009 so managers are expected to have been selected and funded by the middle of 2009.
Ohio PERS has an internally-managed REIT portfolio valued at $1.37bn, split to cover $657m in the Defined Benefit Fund and $720m in the Health Care Fund.