NORTH AMERICA – The Nebraska Investment Council has moved its targeted asset allocation for real estate from 5% to 7.5%. 

This move means the pension fund will have $250m (€184.6m) of new capital to invest in real estate over the next 2-3 years.

Jeff States, state investment officer at Nebraska, said: “Real estate can produce higher returns than other asset classes like stocks and bonds. 

“There also is the idea that real estate can lead to achieving more diversification for our overall investment portfolio.”

Nebraska plans to be active with the capital next year. 

“The new allocation will likely lead to us double the amount we will be investing in 2014,” States said.

“Under the old allocation, we were thing about making one or two commitments next year.

Now we will be doing three or four commitments.”

Nebraska typically invests in real estate through commingled funds. 

The pension fund will be focusing its future real estate investments on the value-added sector. 

States said core was “quite pricey” at the moment. 

“We will be looking at placing more of our future capital into value-added real estate,” said States.

Nebraska will be looking at funds that buy existing properties that have vacancy issues or need a re-positioning or re-tenanting. 

The pension fund would prefer commingled funds that invest in the four major property types of office, industrial, retail and apartments.

The investment staff at Nebraska and Hewitt Ennis Knupp, its investment consultant, will both be involved in the hiring of managers going forward. 

Nebraska now has a real estate portfolio valued at around $500m, while its total plan assets are at $10bn.

In other news, the Public Employees Retirement Association of New Mexico has approved a commitment of up to $50m to the Wheelock Street Real Estate Fund II.

The value-add commingled fund is to invest in a broad range of real estate and real estate-related assets in North America.

The investor wrote in a board meeting document that this would include individual assets, portfolios, operating companies and securities. 

The investment structures could be distressed or high-yielding debt, preferred equity and equity.

Property types considered for investing include hospitality, residential and retail.

Topics