NORTH AMERICA – Public pension funds in the US increased real estate commitments in 2012, according to a report issued by FPL Associates Consulting.
The report found that public schemes made more than 300 commitments in the asset class totalling $31bn (€23bn) of equity.
This is up from $24bn for the year previous.
The database compiled by FPL had commitments from 110 public pension plans that represented $2.7trn in assets under management.
The commitments were made through a variety of investment structures, including closed-end and open-ended commingled funds, co-investments, separate accounts, club funds and programmatic joint ventures.
But the commitments did not involve pension funds going out and buying properties either directly or indirectly.
Tim Kessler, a principal with FPL, said: "This means public pension funds are still showing a good deal of interest in real estate."
Core strategies were most favoured.
Investment vehicles employing this strategy made up 41% of the aggregate commitment volume.
The next two popular strategies were opportunistic (30%) and value-added (21%).
The remaining 8% went to vehicles pursuing senior/mezzanine debt or securities strategies.
From a vehicle structure perspective, commingled funds made up 58% of the total approved commitments.
Open-ended commingled funds picked up speed for commitment dollars in the second half of 2012, representing 20% of all tracked commitments.
"The main reason for this is one large commitment invested all of its $950m into open-ended commingled funds," Kessler said.
This commitment came from the Ohio Bureau of Workers Compensation Fund.
This investment awarded commitments of $200m to the Prime Property fund, $175m to the AEW Core Property Trust, $150m each to ASB Allegiance Real Estate fund and Heitman American Real Estate Trust, $100m to INVESCO Core Real Estate, $75m to the Cornerstone Patriot fund and $50m each to the TIAA-CREF Asset Management Core Property and UBS Trumbull Property funds.
FPL put information into its database from a variety of investment sources, including real estate investment publications, pension fund board meeting documents and direct contact with the pension funds themselves.
