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Connecticut outlines updated real estate pacing plan

The US public pension is diversifying its real estate portfolio by increasing its exposure to non-core real estate and introducing a co-investment program.

Institution: Connecticut Retirement Plans and Trust Funds
Headquarters: Hartford, US
AUM: $43.08 billion
Allocation to real estate: 10.2%

Connecticut Retirement Plans and Trust Funds has approved its real estate pacing plan for the next three years, according to materials from the pension’s June 2021 investment advisory council meeting.

Highlights from Connecticut Retirement Plans and Trust Funds’ June 2021 investment advisory council meeting:

  • CRPTF has outlined its real estate target commitment pacing range for the next three fiscal years, with $200 million committed to non-core real estate funds in 2021 and $450 million anticipated to be committed between 2022 and 2024. The pension defines non-core real estate funds as comprising value-add, opportunistic and debt strategies.
  • Including all 2021 commitments, CRPTF had a total exposure to real estate of $4.255 billion as of 31 March 2021, which represented 10.2 percent of the pension’s total investment portfolio.
  • CRPTF also confirmed the implementation of a co-investment program that would target total exposure worth 10 percent of the pension’s real estate portfolio. Following the successful implementation of the program, CRPTF intends to commit $75 million to co-investments each year.
  • The pension is intending to decrease its exposure to open and closed-ended core and core-plus real estate over the next 12 months from 66 percent of the total real estate portfolio to 60 percent. By 2024 this percentage is projected to decrease further to 45 percent. Closed-end value-add and opportunistic real estate exposure is projected to increase.
  • CRPTF’s real estate pacing plan has allowed for flexibility in its increased allocation to REITs. Allocations to REITs may increase from 2022 by an amount dependent on the overall growth of the CRPTF portfolio.

CRPTF’s real estate commitments for fiscal year 2021 have predominantly focused on North American investment vehicles, largely compromising opportunistic and value-add strategies. Average ticket sizes have fluctuated between $50 million and $100 million, with a peak commitment of $180 million made to Carlyle Realty Partners IX in April 2021.

Other recent private equity commitments confirmed by CRPTF include $75 million to Covenant Apartment Fund X and $50 million to TruAmerica Workforce Housing Fund.

Danita Johnson has been the principal investment officer for real estate at CRPTF since 2018, maintaining primary management and oversight responsibility for the portfolio which represents around $4.4 billion of exposure across multiple real estate strategies. Prior to joining CRPTF, Johnson worked for 10 years as VP of global private equity and real assets at asset manager Franklin Templeton.

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