NORTH AMERICA – The Ohio Public Employees Retirement System has set aside more than $1.3bn (€1bn) for US real estate investments for the 2013 calendar year.
The pension fund is looking to make these investments through a mixture of direct separate accounts and commingled fund commitments.
The investments will be placed through several investment themes the pension fund has planned out for both core and non-core strategies.
According to a pension fund document, Ohio PERS wants to find niche opportunities to earn core-plus returns with assets the meet core risk parameters.
One of these would be a strategy providing debt on existing core property types such as office, industrial, retail and apartments.
Another core strategy is to make investments on the secondary market in limited partnership positions in existing core commingled funds.
Ohio PERS has experience with both strategies.
In 2010, it committed $600m to secondary funds it bought into at discounts to stated asset values.
In the same year, it also allocated $1.7bn to debt managers where the borrower has positive equity.
The final theme for core is a strategy labelled micro core, where the pension fund invests in properties worth less than $10m.
Most typical core properties owned by large pension funds are at least two to three times the size of a micro core deal.
Ohio PERS is planning on to pursue selective non-core niche opportunities – hotels and industrial properties – for this year and beyond.
The hotel investments include a combination of investing equity and debt.
The equity will be to fund new hotel development projects with a preferred equity position.
It will also consider providing hotel loans for development or redevelopment opportunities.
The strategy planned for industrial properties will only be on a debt basis, where the pension fund will provide bridge loans for industrial properties in need of repositioning.