Kentucky Retirement Systems boosts real estate target allocation

The US public pension is hiking its real estate target allocation with the intention to reach its target by the end of the calendar year. 

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Institution: Kentucky Retirement Systems
Headquarters: Frankfort, United States
AUM: $21.4 billion
Allocation to real estate: 3.9%

Kentucky Retirement Systems has confirmed that it is doubling its target exposure to real estate, according to materials from the pension’s May 2021 investment committee meeting.

Highlights from Kentucky Retirement Systems’ May 2021 investment meeting materials:

  • Kentucky Retirement Systems will increase its target allocation to real estate from 5 percent to 10 percent. KRS’s current allocation to the asset class sits at 3.9 percent of its full investment portfolio, amounting to just over $838 million in value. Once the pension’s real estate allocation reaches its intended 10 percent target, its portfolio will be valued at $2.14 billion.
  • To boost KRS’s exposure to the real estate asset class, the pension has approved re-up commitments to two open-ended core US-focused property vehicles.
  • KRS has boosted its initial commitment of $125 million to Harrison Street’s open-ended Core Property fund by $200 million, bringing the pension’s total investment in the vehicle to $325 million. The fund is anticipating to deliver a 5 to 9 percent net IRR to its investors.
  • The pension will also be increasing its commitment to Prologis’s open-ended Targeted US Logistics Fund from its initial $215 million commitment up to $315 million. As with the Harrison Street vehicle, the expected net IRR for this vehicle is 5 to 9 percent.

Other previous recent commitments by KRS to real estate vehicles have included €212.5 million to Barings European Value Add Fund II and $45 million to Lubert-Adler Real Estate Find VII-B.

Anthony Chiu is the pension’s director for private equity and alternatives assets, and includes leadership of KRS’s real estate allocation within his job remit. Mr Chiu has been employed by KRS since August 2016. Previously, Chiu served as vice-president at Presidio Group, where he was responsible for asset allocation and researching equity.

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