The Employees’ Retirement System of Rhode Island (ERSRI) is planning to invest $380 million in real estate over the next two years in order get closer to its target eight percent allocation for the asset class. The $8.2 billion pension system is aiming to deploy $100 million to core strategies each year for the next two years, and $180 million to non-core over the next two years.
Once the capital is called for recent commitments, real estate will represent 5 percent to 6 percent of ERSRI’s portfolio. With the $380 million in the two-year pacing plan added, the pension plan intends to hit its 8 percent goal.
A presentation by consultant Pension Consulting Alliance (PCA) noted that ERSRI hopes to reach an ultimate portfolio balance of about 75 percent in core properties and 25 percent in non-core properties. As of June, it was comprised of 61 percent core properties, 18 percent value-add properties and 21 percent opportunistic properties.
The pension’s real estate portfolio also is slightly underweight to retail, industrial and apartments and slightly overweight to the hotel and office sectors. With new investments, Glickman hopes to bring retail holdings closer to the benchmark, but also noted that ERSRI might pursue opportunities in senior housing.
PCA’s David Glickman noted that ERSRI would continue working with existing managers over the next six to nine months and possibly add new managers after that time period in order further help it to reach its target.
In June, ERSRI committed $30 million to Exeter Property Group’s Exeter Industrial Value Fund III and earlier this year, made a $35 million commitment to Waterton Associate’s Waterton Residential Property Venture Fund XII. Other mangers in the pension’s portfolio include AEW Capital Management, Heitman, JP Morgan Asset Management and Prudential Real Estate Investors.
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