Switzerland’s biggest pension investor is seeking to allocate up to 3% of its investment portfolio – CHF900m (€791.5m) – to commercial real estate loans as part of a broader risk-reduction shift.
According to IPE Quest mandate search QN-2483, Publica plans to award two or three mandates for managers of “senior mortgages on stabilised assets”.
Publica stated: “The goal is to enhance the risk/return profile of the overall portfolio by harvesting illiquidity and complexity premiums and at the same time increase the diversification for the overall portfolio.”
“As commercial real estate loans should increase the stability of the overall portfolio and generate steady income streams, the focus will be on senior loans on stabilised assets.”
In the manager search notice, the investor said it would prefer global managers but was prepared to allocate to regional specialists as part of a wider global loans portfolio.
Managers pitching for the contract should have at least CHF1.5bn in commercial real estate loan strategies already, and at least CHF20bn under management across all strategies.
They should also have real estate equity capabilities “in the geographic regions where he is active as a real estate debt manager”, Publica said.
The mandates will be held as segregated accounts and benchmarked against a customised public corporate credit index.
Publica added: “The investment manager must have a strong standing in the commercial real estate loan market and be able to demonstrate strong sourcing and asset management capabilities.”
Publica – which runs CHF40bn for Swiss public sector pension plans – announced in August that it planned to reduce risk across its portfolio by cutting equities and increasing its exposure to real estate.
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