REAL ESTATE - The $34.4bn Maryland State Retirement System has selected Morgan Stanley as its global REIT manager.
The pension fund took this action at its board meeting towards the end of July.
The fund has awarded an allocation of up to $150m to Morgan Stanley. The funding for this investment program should be happening in the next 30 to 45 days.
Earlier this year, the pension fund had initiated an RFP to hire a global REIT manager. The other finalist in the search was CB Richard Ellis Global Real Estate Securities.
Maryland State has defined a global REIT investment mandate as one that does not include making investments in any companies that are located in the United States.
The fund will be looking to buy shares in public traded companies that are located in a variety of countries around the globe. These firms are typically involved in the ownership and management of the main property types of office, industrial, retail and residential.
Maryland hopes that this investment strategy will give it more diversification within its real estate portfolio.
The global REIT strategy was part of a revised real estate program that was approved by the PF’s board earlier this year. This new plan was suggested by the pension fund’s consultant, Pension Consulting Alliance.
Maryland now has a targeted real estate allocation of 5%. For the most part, the pension fund is just about invested all of its real estate allocation. This doesn’t mean it can’t invest more capital. The pension fund does a range for investing in real estate of 3% to 7%.
Maryland’s real estate investments for fiscal year 2006 produced a return of nearly 24%.