NORTH AMERICA - The San Jose Fire and Police Retirement Plan is planning to put $62m (€50m) of new capital into real estate.
The pension fund now has a real estate portfolio valued at $120m as of 30 June, amounting to 4% of its $2.6bn in total plan assets.
Ronald Kumar, financial analyst at the scheme, said: "We will be going over with our general investment consultant, Boston-based NEPC, on how we might invest this capital going forward."
Once the new capital is invested, the pension fund will have achieved its new 7% targeted allocation for real estate, down from 10%.
The decision to change the allocation - based on NEPC's recommendation after completing an asset allocation review - was made earlier this month.
Kumar explained that the pension fund increased its allocation to other asset classes such as hedge funds and real assets, which in turn reduced the allocation to other asset classes.
Investing in commingled funds is part of a long-term strategy San Jose Fire and Police put in place in the autumn of last year.
Prior to this, its entire real estate portfolio had been invested in direct separate account assets.
At the time, it made the decision to offload the majority of its separate account assets to a core open-ended commingled fund.
In August of last year, San Jose Fire and Police had approved the transfer of office buildings in Oak Brook, Illinois, and Greenwood, Colorado, and a 186-unit apartment in Houston to the American Realty Core Fund for $55.35m.
These properties had been owned by the pension fund on a direct separate account basis.
The pension fund said it made this strategic change in its portfolio so it could achieve a higher level of diversification.
The American Core Realty Fund, managed by American Realty Advisors, owns a national portfolio of office, industrial, retail and apartments.
