Ohio Police & Fire commits to Clarion, Fortress

The $12.33 billion pension plan has agreed to invest up to $80 million to two real estate funds managed by Clarion Partners and Fortress Investment Group.

The Ohio Police & Fire Pension Fund has approved commitments of up to $80 million to two real estate funds at its board meeting this week.

The $12.33 billion pension plan will invest up to $50 million in Clarion Partners’ Lion Industrial Trust, an open-ended fund focused on the US industrial sector. According to a document released by the pension, the New York-based real estate investment manager is seeking to expand the fund’s investment portfolio, which currently comprises 500 assets with a total value of $3.7 billion, through new core and value-added acquisitions. The investment represents “an attractive valuation entry point and immediate access to a high-quality diverse pool of assets,” the pension noted.

Additionally, Ohio Police & Fire has committed up to $30 million to Fortress Investment Group’s Fortress Japan Opportunity Fund II, which represents a follow-on investment. The pension previously committed $25 million to Fortress Japan Opportunity Fund I in 2010.

Fortress Japan II held an initial close of $550 million in December 2011 and is expected to hold a final close with an additional $750 million in commitments this December. With a gross IRR target of more than 20 percent, the vehicle “is an attractive opportunity on a risk-adjusted basis and adds diversification to Ohio Police & Fire’s real estate portfolio,” the pension said. In addition, the investment would increase the pension’s international real estate exposure to approximately 11.1 percent, up from 9.4 percent currently.

As of 31 January, Ohio Police & Fire’s real estate portfolio was valued at $1.1 billion, or 9.1 percent of its total assets. “We currently are trying to increase our real estate portfolio to 12 percent, as per our asset allocation study from 2010, so we likely will be considering several real estate opportunities throughout the year,” a spokesman said in an email.