NORTH AMERICA - The Pennsylvania Public School Employees Retirement System has decided to divest from a trio of open-ended core property funds.
The pension fund confirmed it was no longer an investor in the Cornerstone Patriot Fund, the Prime Property Fund or the RREEF America REIT II.
It said it had re-allocated the funds after identifying an opportunity in an undisclosed value-add strategy.
Pennsylvania Public School originally invested $100m (€80m) in the Patriot Fund in 2008 and valued the investment at approximately $71.7m at the end of 2011, realising an IRR of -5.61%.
In 2006, the pension fund invested $100m each in Prime Property and RREEF America II. The Prime Property was valued at $41m and the RREEF America II at $3m at the end of 2011.
The IRRs on these investments were -0.49% for Prime Property and 1.2% for RREEF America II.
Pennsylvania Public School still holds positions in three other core, open-ended funds - PRISA, UBS Trumbull Property Fund and JP Morgan Strategic Property Fund.
In other news, the Connecticut Retirement Plans and Trusts Fund is considering a $100m commitment to the Cornerstone Patriot Fund.
The State of Connecticut has not made the final decision as to when the capital will be committed.
In a document for the pension fund, Denise Nappier, state treasurer, pointed out that Cornerstone's Patriot Fund had outperformed core asset rivals and been a top-quartile performer over a seven-year period.
Lee Ann Palladino, chief financial officer at the state Treasurer, cited other strengths, including the fact the fund had a short entry queue and invested in Philadelphia, Seattle and Denver - markets to which the pension fund had not been exposed.
The expectation is that the commitment from Connecticut will be drawn down within one quarter.
This compares with other open-ended, core funds where new commitments can sit for six months to a year before the capital is called.