Massachusetts PRIM seeks core manager

The pension system is adding a fifth separate account manager to its roster, with an initial allocation of up to $500m.

The Massachusetts Pension Reserves Investment Management Board is looking for a core separate account manager, the pension system said at its Tuesday meeting.

The pension system approved the issuance of a request for proposals at the meeting. The core manager will have an initial allocation of $300 million – $500 million, and will be able to invest part of the allocation in non-core strategies, according to its meeting materials.

PRIM said its last formal review of core real estate, which comprises 70 percent of the pension system’s property portfolio, took place seven years ago.

The pension system currently has four separate account managers that collectively manage 85 assets worth $5.6 billion: AEW Capital Management, Invesco Realty Advisors, JPMorgan Investment Management and LaSalle Investment Management. AEW took over a core account from TA Realty, whose account was terminated in October 2015.

PRIM ended its relationship with TA Realty because of underperformance, staff turnover, the sale of a majority interest in the firm to the Rockefeller Group in 2014 and misalignment between TA Realty’s strategy and PRIM’s return requirements, according to meeting materials at the time.

“Staff continues to believe that utilizing five separate accounts represents the most favorable investment structure,” the pension system wrote in its meeting materials. “An additional manager would optimize the portfolio’s core and non-core diversification benefit and enhance PRIM’s sourcing and research options.”

Real estate comprised 9.1 percent of the $67 billion PRIM fund as of June 30, with the asset class returning 6.8 percent for the year ending that date.