State Teachers Retirement System of Ohio could be more of a seller than an investor in real estate in the 2016/2017 fiscal year.
The pension fund has identified several potential asset dispositions in its direct portfolio during the fiscal year, according to its new investment plan. It is, however, also planning to selectively evaluate acquisitions.
As much as $100m (€89.4m) of office assets could be sold in the current fiscal year. The move would provide capacity for new office acquisitions, without increasing overall weighting to the sector.
The pension fund is currently over-allocated to real estate. As of June this year, it had invested 11.4% of its total plan assets (€70.5bn) in real estate, above its target allocation of 10% for the asset class.
It ended the 2016 fiscal year with a real estate portfolio valued at $8bn, up from $7.6bn at the beginning of the fiscal year.
Ohio Teachers is one of a few US pension funds that invests most of its capital on a direct basis, without using outside managers. The fund has a large enough staff in real estate investment to buy and sell properties.
The pension fund is most underweight in retail. Its investment staff will continue to look for retail assets either in urban infill centres or “grocery-anchored, necessity-based” neighbourhood centres.
Most potential investments for the pension fund will be focused on major US metropolitan markets as a way to provide additional diversification.