UNITED STATES - Ohio Public Employees Retirement System will allocate $1.6bn (€1.2bn) in real estate this year and will be targeting stable assets as well as motivated sellers in particular.
The pension fund has approved an investment strategy which it believes will yield attractive investment returns thanks to a recent repricing which the industry consensus believes signals the bottom of the real estate market.
Ohio PERS will be investing through three main structures: separate accounts; open-ended and closed-end commingled funds .
The fund is expected to allocate an estimated $683m to its existing separate account managers, one of which is Great Point Investors.
That sum will be split across two areas as approximately $189m will be set aside for managers to complete the repositioning/redevelopment of the existing assets in the portfolio, and the larger $494m chunk will be used to buy new properties over the year.
Investment staff at Ohio PERS have approved up to $124m in property sales through its separate account managers, in a bid to cull the portfolio and make opportunistic sales.
It is anticipated that the value of the separate account portfolio will be $2.93bn by the end of 2010.
Up to $600m could also be invested in the open-ended commingled fund sector, although it will depend on market fundamentals and portfolio valuations. Officials believe sector could allow the fund to access stabilised properties at attractive pricing.
A further $225m-$275m is likely to be invested in the closed-end commingled funds, delivering three to five non-US investment partnerships over the year.
Ohio PERS is currently underweight real estate as its real estate portfolio was valued at $4.5bn by the end of 2009 and amounted to just 8.2% of its $56.6bn in total assets, against a target allocation of 10%.