State Teachers Retirement System of Ohio is planning to sell $300m (€264m) of assets from its directly-held real estate portfolio and reinvest the proceeds over the next 12 months.
The pension fund is also planning to return to making commitments to international real estate funds after a period of political upheaval and economic uncertainty.
According to the pension fund’s investment plan for the 12 months ending 30 June 2018, it is likely to focus on retail and alternative property sectors.
Ohio State Teachers, which unlike most US public pension funds manages its direct portfolio in-house, is most overweight to industrial property and underweight retail.
Industrial property has been the best performing part of its portfolio for the second year in a row and the only sector to generate double-digit (14%) returns.
Due to it being under-exposed to retail property, Ohio State Teachers will look at dominant retail assets in urban and infill locations, and grocery-anchored shopping centers if they become available to buy.
Investment staff will also evaluate other sectors including senior living, medical office and student housing with a view to generating returns uncorrelated with traditional core real estate.
Most of the acquisitions will be focused in major metropolitan markets across the US. However, additional markets will be considered in select cases for particular property types.
Earlier this year, the pension fund sold a San Francisco office for $473m after 20 years of ownership.
Ohio State Teachers has also identified a number of international real estate funds it plans to invest in over the next 12 months. It is looking to commit a total of $150m.
This marks a departure from the previous 12 months, during which the pension fund mande no commitments to international real estate funds.
According to the investment plan, its reluctance to invest in funds was due to the upheavel in global politics and an uncertain economic outlook.