OPERS reveals private real estate portfolio plans

The US public pension has highlighted changes to its real estate investment portfolio.

Name: Ohio Public Employees Retirement System
Headquarters: Columbus, US
AUM: $94.73 billion
Allocation to real estate: 12.5%

Ohio Public Employees Retirement System has confirmed plans for a new direction of its real estate portfolio, according to materials from its latest retirement board meeting.

On April 1, a board-approved target allocation change to the asset class came into effect, with an increase from 10 percent to 12 percent. At the end of Q1 2023, the plan’s allocation sat at 12.2 percent, with a boost to 12.5 percent confirmed on April 10.

Under the previous arrangement, the pension’s real estate portfolio was divided between closed-end funds (15 percent), open-end funds (25 percent) and separate accounts (60 percent). Its new strategy will re-evaluate its direction on open-end funds and separate accounts, rebalancing the portfolio with a 40 percent weighting to open-end and 45 percent to separate accounts (closed-end remains at 15 percent).

This is intended to give the public pension the ability to accurately reflect changing industry standards and tactically manage over/underweights in its portfolio. The portfolio is focused on generating alpha in both core and non-core, actively managing all strategies, not just non-core, and aligning investments with the perpetual nature of the portfolio.

Geographically, the portfolio is weighted 98 percent to US investment, with the other 2  percent international-focused. Portfolio weighting is fairly diversified on a sector level, as illustrated below. Historically, a rise in apartment investment corresponds to a drop for office, retail and hospitality – a protective measure taken up by many US public pensions on the back of the covid-19 pandemic.


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