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$50bn Alaska fund targets Europe via LaSalle

The investment management firm for the oil reserve fund of US state Alaska is finally deploying capital on European real estate 34 years after its formation.

The $50 billion Alaska Permanent Fund Corporation that was set up as long ago as 1980 to manage investments made with the state’s oil money is to make its first investments in European real estate.

Chicago-based LaSalle Investment Management – which already counts Alaska as one of its clients – revealed the strategic move after scooping a mandate to advise the investor on a £250 million (€304 million; $417 million) UK commercial property investment program.

Even though the Alaska fund has a diverse portfolio of assets including US and non US fixed income securities, equities, infrastructure and real estate, it is yet to invest in commercial property in Europe, said LaSalle.

Detailing the mandate, LaSalle explained how Alaska was keen to be exposed to investments of between £50 million and £150 million in across the property sectors, including mixed-use real estate in the UK.

The fund has been working to a target asset allocation of 36 percent to securities, 20 percent bonds and cash, 12 percent real estate, 6 percent private equity, 6 percent absolute return strategies, 4 percent infrastructure, and 16 percent in other asset classes. By ‘risk factor’ it is aiming for a total of 19 percent in Real Assets. According to the fund, it wants exposure to real assets because of the inflation hedge the asset class offers.

Its current portfolio contains retail, residential, and office buildings in the US, such as 120 East 87th Street in New York.

Michael Burns, executive director and chief executive officer of the Alaska fund said: “While the entry into Europe is clearly expected to provide diversification benefits, the increased capital dedicated to real estate (both domestically and globally) compels us to expand our footprint and opportunity set.”

Apart from LaSalle Investment Management, it counts among its real estate managers AEW Capital Management for a REIT mandate.