Real Estate News
Ohio Police & Fire rebalances core real estate portfolio
31 Jul 2012
UNITED STATES - Ohio Police & Fire Pension Fund has decided to partially redeem out of two open-ended core funds, re-investing the capital across its remaining three core vehicles.
The pension fund chose to redeem $75m (€61m) from Morgan Stanley Prime Property Fund and $60m from Invesco Core Real Estate Fund, re-deploying $75m into Pramerica Real Estate Separate Account (PRISA) and $30m into JP Morgan Strategic Property Fund.
The remaining $30m is being placed in reserve to fund an existing commitment to the LaSalle US Property Fund.
The move is in line with Ohio Police & Fire's 2012 investment policy, which has called for the pension fund to remain overweight in its core strategic portfolio.
The pension fund stated that the redemptions would not be occurring immediately. Morgan Stanley and Invesco were expected to pay back capital over the next two quarters.
In re-balancing its core portfolio, Ohio Police & Fire hopes to make savings by limiting new investments to its existing roster of managers. It said in a statement that it felt "confident" with these managers and would be able to take advantage of fee savings by concentrating positions.
The pension fund has forecast savings to total between $280,000 and $315,000 per year, although the exact amount would depend on the incentive component of the fee.
Prior to re-balancing, Ohio Police & Fire had invested $129m in Morgan Stanley's Prime Property Fund, $143m in Invesco's Core Real Estate Fund, $73.4m in PRISA, $120m in JP Morgan's Strategic Property Fund and $29.4m in LaSalle's US Property Fund.
Its overall real estate portfolio was most recently valued at $1.2bn with total plan assets of $12bn at the end of June. The portfolio is slightly underweight on a market value basis; if current outstanding commitments to tactical funds are included, the portfolio is in line with its 12% targeted allocation.
Ohio Police & Fire has committed $25m to the Brookfield Brazil Timber Fund II. The pension fund said it expected a 15% gross nominal return, with the new commitment putting the it scheme on the path to investing 3% of its total plan assets in timber. It has now committed $275m of its $360m allocation for timber.
Author: Jon Peterson