AEW lands Nevada PERS core portfolio

The Boston-based fund manager beat out rival Heitman to take over a portfolio of 17 core US properties owned by the $26 billion state pension plan. The portfolio previously was managed by BlackRock.

The Nevada Public Employees Retirement System (PERS) has selected AEW Capital Management to take over an existing $600 million core real estate portfolio from BlackRock. The Boston-based fund manager beat out rival Chicago-based private equity real estate firm Heitman to take over the portfolio. 

Dana Bilyeu, executive director for the $26 billion state pension system, confirmed with PERE that Nevada PERS listened to presentations by AEW and Heitman at its board meeting on 20 June. Nevada ultimately selected AEW. 

“The board felt that, given some personnel and investment process changes at BlackRock, they weren't as good a fit and wanted to go to the market for the mandate,” said Bilyeu on the desire for new management for the portfolio. “We continue to have a very good relationship with BlackRock in other asset classes.”

The portfolio, which consists of 17 core US office, industrial, retail and multifamily properties, previously had been managed by BlackRock for the past decade. “It’s going to be an on-going portfolio that we plan to grow to close to $1 billion,” Bilyeu added. That would mean nearly $400 million in new core investments by the state pension plan going forward. AEW officially will assume BlackRock's role next month.

Nevada PERS has had core properties in its real estate programme since 1986. Currently, the portfolio's largest asset is 1775 Eye Street in Washington DC, a 180,000-square-foot office building owned by the pension plan for nearly 15 years and valued at $120 million as of 31 March. The most recent acquisition was a MachineWorks office building in Portland, Oregon, bought in July 2011 and currently valued at $41.2 million.