UNITED STATES - Alaska Retirement Management Board has expanded into timberland for the first time with a $200m (€142.5m) allocation.
Hancock Timber Resource Group and Timber Investment Resources will each receive
$100m investments to invest in US timber through separate account programmes, according to Steve Sikes, State investment officer for the pension fund.
"We think that timberland will act like core real estate in that it will produce solid cash flow returns. It will give us more diversification as it has no correlation to stocks and bonds. This will be a very safe investment as timberland typically does not have a great deal of volatility."
Alaska Retirement anticipates timberland will yield a 9-11% nominal return on a 10-year holding period.
Similarly, the fund has now approved its annual real estate investment plan for fiscal year 2008, and will invest $300m in non-core real estate over the next 12 months as it is already over-allocated beyond its 60% core holding.
Alaska Retirement is planning on investing the capital with its mixture of existing managers, said Sikes.
"We have been pleased with the returns we have achieved with our current managers and many of them are now in the market with a new commingled fund. It would make sense to continue our relationship with them," he added.
Some of those managers are Tishman Speyer Properties, Rothschild Realty, Coventry Real Estate Advisors and ING Clarion Partners.