US - City and County of San Francisco Employees' Retirement System has allocated as much as $450m (€350m) for real estate investing for the 2012-13 fiscal year.
The fund has earmarked the vast majority of this amount - as much as $400m - for non-core investment strategies.
The fund made the allocation based on the recommendation of its real estate consultant, the Townsend Group.
In a memo for San Francisco Employees' 9 May board meeting, Townsend wrote that strategies were expected to "fill capital voids" as investors returned to seeking yield while avoiding risk.
Higher-return strategies with strong income components will continue to be favoured, as will managers with niche strategies and focused approaches to investment.
The pension fund expects the non-core investments to be made through a variety of commingled fund investments.
These potential commitments will be researched and brought to San Francisco for board approval by Townsend.
For non-core investments, the consultant is projecting a four-year holding period and at least a 10% net IRR.
Two strategies the pension fund remains attracted to include the purchase of loans at a discount and investor recapitalisations.
The other area for potential investing is for as much as $50m to be invested in a public core portfolio.
This would be accomplished through a split allocation to the two existing global REIT managers - EII Realty Securities and CBRE Clarion Real Estate Securities.
Together they manage existing portfolios that total $153m, or 9.2% of the overall real estate portfolio held by San Francisco.
Townsend wrote in the board-meeting memo that this new allocation was needed to keep the public core portfolio at its 10% limit.
For core investing, the pension fund is looking at a 10-year holding and achieving a net IRR of 6.5%.
San Francisco is now over its 20% allocation for core private real estate in its existing portfolio.
The only planned movement in this area will be strategic dispositions when opportunities present themselves.
The pension fund holds a real estate portfolio valued at $1.5bn, as of the end of 2011, or 10.3% of its $14.6bn in total plan assets.
The targeted allocation to real estate is 12%, with a range of 9% to 15%.