Maryland State Retirement and Pension System intends to invest around $200m (€170m) a year in non-core funds to help rebalance its real estate portfolio.
In a board meeting report, real estate consultant The Townsend Group said Maryland should also refine its core portfolio and review its real estate investment trust (REIT) strategy.
Townsend said new investments would mostly take the form of commitemtns to non-core funds targeting US West Coast markets, since the pension fund is underweight the region by 7.5%.
At the end of June, Maryland’s existing real estate portfolio was valued at $3.97bn, representing 8.2% of total assets.
The pension fund hopes to reach its 10% target allocation to real estate within five years.
Townsend said it should use quarterly deposit and redemption windows to refine its core investments, which make up 60.5% of the real estate porfolio.
Townsend has also advised the pension fund to review its strategy, allocation targets and mandates for public real estate securities.
The pension fund has 17.1% of its real estate portfolio invested in REITs.