The $64.5 billion Ohio Public Employees Retirement System intends to invest approximately $1.1 billion per year over the next three years in real estate. The $3.3 billion increase, which is part of the fund’s investment plan for this year, will more than double its current $3.2 billion exposure to the asset class. The fund is increasing its exposure because it expects real estate to outperform other asset classes.
Richard Baker, spokesman, confirmed that this year the fund will invest $125 million in apartments, $350 million in industrial buildings, $200 million in office space, $350 million in retail properties and the remainder in other sectors that have not yet been determined. The fund aims to add value by overweighting new investments in non-core assets, targeting geographic regions and seeking niche strategies with favorable supply and demand characteristics.
The fund expects that by the end of 2008, 65% of its real estate portfolio will be managed though separate accounts and 35% in commingled funds because separate accounts have more flexibility and lower costs than commingled funds.
The Townsend Group is the fund’s real estate advisor and Ennis Knupp + Associates is its general consultant. Private real estate managers that work with the plan include Bristol Group, Great Point Investors, LaSalle Investment Management and Sarofim Realty Advisors.