REAL ESTATE- The Oregon Public Employees Retirement Fund is approaching making a final decision on its search for a global REIT manager. The pension fund expects to make a final choice sometime during the late summer to early fall.
The pension fund’s Real Estate Investment Officer Brad Child said, “It’s our opinion that there is two good reasons why we should have a global REIT manager. One is that an increase in yields in some foreign countries versus the US. We believe that returns in Asia can deliver a 100 basis point difference in comparison to the US. Diversification is the other major factor. We can invest in different counties, companies and economies by having a global REIT program.”
Oregon PERF did receive a total of 17 responses to its global REIT RFP search. The pension fund is now going over these responses with its consultant, Pension Consulting Alliance.
The initial amount allocated for the global REIT mandate is in the neighborhood of US$100m (€78.2m) to US$200m. There is a chance additional capital could be allocated to the programme at a later date.
Oregon needs to make a decision on what kind of global REIT manager that it wants. The two choices that it has are an index fund style strategy or a stock picking manager. Child said, “This is something we are going to have to get worked out before we make our final decision as to who we hire.”
It really shouldn’t be a big surprise that Oregon PERF is doing a global REIT manager search. The pension fund has been at the forefront of many real estate strategies by institutional investors in the US.
Oregon PERF was one of the first pension funds in the country to create a domestic REIT mandate. This occurred in the early 1980s. It still has an active programme today. The current value of its US REIT portfolio is around US$847 million.