GLOBAL - The Pennsylvania State Employees Retirement System has decided to change its benchmark for private real estate investment.
It will now be using the NPI All Open-Ended Commingled Fund index instead of the NCREIF Property index.
Pennsylvania State officials said they wanted a benchmark that better reflected the range of private real estate the scheme owns.
The NPI is composed mostly of core properties with no leverage. Approximately 98% of the index is made up of the four main property types: office, industrial, retail and apartments.
The pension fund has invested in a number of commingled funds that own core properties. It also holds interests in properties that are either considered value-added or opportunistic.
Pension fund officials said the NPI would also be a truer representation of its private real estate portfolio, as it holds core assets, as well as hotels, senior housing and land.
The new benchmark covers 35 of the largest open-ended commingled funds in the market. There are also some core commingled funds and others that are focused on a single property type like industrial are considered to be value-added.
The index covers more than 2,600 properties, with combined assets worth more than $103bn (€73.9bn).
Pennsylvania State holds a real estate portfolio valued at $2.1bn through the end of June 2010.
The fund has invested 8.8% of its $24.2bn of total plan assets in real estate, with the targeted allocation set at 9%.
Pennsylvania State officials said the fund had so far had a very quiet year with respect to real estate and that they were waiting for the economic collapse to workout itself out.