Ohio Police & Fire Pension Fund has committed capital to industrial real estate funds for two months in a row, causing the pension fund to be over-exposed to the sector versus its benchmark.
The pension fund said it approved a $60m (€54.1m) commitment to Exeter US Industrial Value Fund V this month and $50m to Black Creek Industrial Fund in September.
Its industrial exposure was in line with the NCREIF ODCE Index, but the new investments will increase its 18% industrial weighting by about four percentage points.
According to the pension fund’s consultant The Townsend Group, this level of exposure should reduce over time as some of its existing industrial fund are due to make large and profitable sales of assets.
Townsend told IPE Real Assets that the recommendations were based on “market views about the sector and the strategy, assessment of the manager, terms and portfolio needs”.
As previously reported, Exeter Property Group’s US Industrial Value Fund V is seeking to raise $1.6bn.
Exeter is targeting net returns of 13-14% and gross returns of 16-18% by acquiring assets with short remaining lease terms, properties with vacancy and assets that can be developed or redeveloped.
Ohio Police’s Black Creek fund commitment has been placed into the pension fund’s tactical/value-add real estate portfolio.
Black Creek seeks returns of 9% to 10.5% over the next five years and with leverage projected to be in the range of 40% to 50%.