UNITED STATES- Ohio Police and Fire Pension Fund is to invest $260m (€183m) in real estate over the next three years, with $50m of that amount to be invested between now and the end of 2009.
This allocation would be the pension fund's first investment this year. It is aiming to place the capital into a commingled fund that has a tactical investment strategy, probably an investment fund with either a value-add or opportunistic strategy.
The investment will be made into a single commingled fund. In future the pension fund will only be making commitments to commingled funds of a minimum of $50m. According to pension fund officials, this will give the pension fund the opportunity to invest more capital with the better fund sponsors.
Ohio Police and Fire is likely to invest another $210m in the real estate sector over the next three years. One reason is that over the past half year the pension fund wrote down its real estate portfolio significantly. At the end of 2008, the real estate portfolio was valued at $970.5m. At the end of July, the portfolio was valued at $724.2m which represents a total allocation of 7.5% compared with a long-term target allocation to the asset class of 12%.
More capital could be available to Ohio Police and Fire if the recent strong performance of its equities portfolio continues; according to the most recent data the pension fund had total assets of $9.8bn, mainly on the back of good returns.
Ohio Police and Fire has not yet decided on an overall investment strategy yet for the future. This will be drawn up with assistance from its real estate consultant, The Townsend Group.