Arizona unveils commitments, eyes overseas GPs

Like other big public pensions, Arizona has turned a keen eye on real estate. The state pension has committed $150 million to three managers and is looking to Europe and Asia.

The $27.8 billion (€19 billion) Arizona State Retirement System (ASRS) has reportedly committed capital to three real estate managers including Blackstone Real Estate Partners VI, Tishman Speyer Real Estate Ventures VII and CIM Fund III, a combined commitment of $150 million.

Eric Rovelli, Arizona’s real estate portfolio manager, said in a September 28 investment committee meeting that ASRS would also focus on international investments, including in Europe and Asia, going forward. The ASRS real estate program started in 2005 and has since committed $700 million to 13 managers. Arizona has a 6 percent allocation to real estate.

The current year has seen a robust fundraising market for private equity real estate, with a large amount of investment capital coming from state pensions. Recently, the $90 billion New York State Teachers’ Retirement System committed a reported $285 million to a selection of funds including a $110 million investment in Rockpoint Real Estate Fund III. The $41.8 billion Illinois Teachers Retirement System also committed $250 million to international funds including the Macquarie Global Properties Asia Fund III, LaSalle Asia Opportunities Fund III and Carlyle Europe Real Estate Partners III.

Large public pensions have also increased their property allocations. The Oregon Public Employees pension increased its target real estate allocation to 11 percent, a 3 percent jump from its previous target of 8 percent. The California Public Employees’ Retirement System (CalPERS)—the country’s largest public pension with close to $248 billion in assets—may increase its real estate investments to $36 billion over the next five years.