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SWIB targets up to $1bn in RE investments in 2016

Wisconsin’s pension fund plans to invest primarily in separate accounts and joint ventures this year.

The State of Wisconsin Investment Board (SWIB) plans to invest between $750 million and $1 billion in real estate in the coming year, according to materials from its Wednesday meeting.

The pension fund manages $6.2 billion in real estate assets from a $99 billion portfolio as of December 31, according to meeting materials. This year, the Wisconsin fund plans to focus its investments in separate accounts, which it said give the board total discretion but take up the most staff time, and joint ventures, which SWIB said align partners’ interests and give the fund access to larger transactions. Both investment structures allow the board to have greater control over specific asset selection, SWIB said in its Wednesday presentation.

This year, SWIB sees areas of US investment opportunity in falling prices in niche property types and fewer bidders in competitive deals. The board will focus on stable, income-producing properties and asset sales, also pressing managers of closed-end funds to dispose of properties. SWIB works with 45 external advisors and general partners, according to the meeting materials. SWIB warned in its meeting materials that properties’ rent growth is slowing, but demand is still higher than new supply.

Over the years, the pension fund has increased its core investments from 37 percent of the real estate portfolio in 2011 to 64 percent last year. Value-add investments saw the biggest drop, down to 19 percent of the portfolio in 2015 from 35 percent in 2011, as of September 30, according to meeting materials.

Courtland Partners is SWIB’s real estate consultant.