REAL ESTATE - The Ohio Police & Fire Pension Fund has issued a request for proposal (RFP) for an independent fiduciary to evaluate a portion of its real estate portfolio. The responses are due to the pension fund on or before 3:00 PM eastern time on February 19.
The assignment involves seven properties in the pension fund’s portfolio. These are going to be exchanged in return for an ownership stake in the Core Real Estate Fund being offered by INVESCO Real Estate. The value of the properties needs to be updated as they were last assessed during the third and fourth quarters of 2006.
The properties are a mixture of assets located around the country. They include apartments, office, industrial and retail. This real estate is currently held by INVESCO Real Estate as a separate account manager for Ohio Police & Fire.
The plan is to have the pension fund’s board hire the independent fiduciary sometime in March. The work on the portfolio in question should be completed around the middle of June. At this time it will then be determined how much of an ownership the pension fund will get in the commingled fund.
Ohio Police & Fire has the Townsend Group as its real estate consultant. Principal Frank Blaschka, who works on the Ohio account, said: "The pension fund made a decision at the end of 2005 to focus its investment strategy on commingled funds and selling off some its assets in its separate accounts. There hasn’t been much interest industry wide in separate accounts since this decision was made."
Getting to the pension fund’s 8% targeted allocation for real estate through separate accounts is very difficult in today’s marketplace. Blaschka said, "All of the capital flowing into real estate has made it hard on separate account managers to find assets. Commingled fund investing makes more sense at this time."
One of the benefits to going into the transaction with the INVESCO commingled fund is diversification. Blaschka said, "Instantly, we will get an ownership position in a lot more than just seven properties. Gross assets in the Core Real Estate Fund are now at $1.5bn."
Ohio Police & Fire will continue to look at investing capital in more commingled funds in the future. Some will have a core investment strategy and others could be high return funds.