UNITED STATES - Ohio Police and Fire Pension Fund have increased its real estate allocation from 8% to 12%.
This will give the $11.7bn pension fund the capacity to invest a further $400m (€256.9m) into new real estate investments over the next five years.
Pension fund officials believe real estate has been a strong performer for the retirement scheme over the past several years so it wants to be able to keep investing in the asset class.
The only way to do this, however, was to increase its targeted allocation as the fund had already reached its previous allocation of 8%.
Ohio Police and Fire is one of the few major pension funds in the US to increase their allocation to real estate in 2008 as most investors are either keeping their current allocation or looking to invest less in real estate this year.
Fund officials made decision at its board meeting on July 30, with the support of its general consultant, Wilshire Associates.
Any future decisions as to how that money is likely to be invested are likely to be taken with the pension fund's real estate consultant, The Townsend Group and the next step in the process will be figuring out what the investment strategy will be for this new capital.
Sources says there could be some new strategies considered by the fund when the board meets in the autumn, as most of the pension fund's recent activity has been to invest capital in high return or opportunity funds.
The most recent example of this is a $25m commitment into the Westbrook Real Estate Fund VIII, as approved at its July board meeting and it's anticipated the pension fund will achieve a 20% gross IRR and a 16% net IRR for its commitment to the global commingled fund.
Ohio Police and Fire has a real estate portfolio valued at $1bn at of the end of June, amounting to 8.4% of the plan's $11.7bn in total assets.