Ohio Police & Fire to invest in core commingled fund
REAL ESTATE - The Ohio Police & Fire Pension Fund has issued a $100m (€79.4m) commitment to the Heitman Core Property Fund.
The pension fund took this action at its board meeting on September 28. The Townsend Group is the pension fund’s real estate consultant. The person working on the Ohio Police & Fire account for the company is Frank Blaschka. He was responsible for bringing in the Heitman commingled fund for a possible investment.
Ohio Police & Fire and Townsend felt good about investing with Heitman. The real estate manager has a strong historical performance with a core investment strategy. It also has demonstrated success in finding off market transactions. This is important as the manager won’t get into bidding wars for properties that are heavily marketed to many different buyers.
Heitman is the manager of the Heitman Core Property Fund. Ohio Police & Fire will be one of a limited number of pension funds or institutional investors that the fund will be accepting initial contributions from. This will be in the range of six or seven investors.
Heitman Core Property Fund is a core open-ended commingled fund. The goal for returns is to out perform the NCREIF Property Index by 100 basis points during the first five years of the fund. The long-term hope is to achieve a 7% to 8% total return.
Heitman Core Property Fund will mostly be investing in the four main property types of office, industrial, retail and apartments. These assets will make up a minimum of 85% of the commingled fund’s portfolio. These will be established and leased properties that are located in major metropolitan areas across the country.
Ohio Police & Fire does have a previous history investing with Heitman. In 2004, the pension fund made a $25 million commitment to Heitman Value Partners. This is a commingled fund that sets up joint ventures with operating partners that focus on a specific property type. The pension fund now has $15.9 million of its commitment invested in the commingled fund.
Ohio Police & Fire has a real estate portfolio valued at $578m. This amounts to 5.26% of its $11 bn total portfolio. The pension fund has a targeted real estate allocation of 8%.