Thailand’s Government Pension Fund (GPF) is set to make its first meaningful step towards growing a global real estate portfolio by awarding the Townsend Group with a multi-manager mandate to invest an initial $250 million.
GPF manages the pensions of the country’s government employees and currently has approximately $17.5 billion of assets under management, predominantly in Thai fixed income products. According to its official numbers, the state pension has a real estate allocation of just 3.56 percent of its total assets and the overwhelming majority of it is Thai property.
But that is about to change. PERE understands that Cleveland-based Townsend Group has been selected to deploy GPF’s capital into real estate funds focused in North America, Europe and Asia ex-Thailand after beating off strong competition from some marquee multi-manager platforms. The world’s largest real estate investment manager CBRE Global Investors also bid, as did London-based Aviva Investors. Documents are still being finalised but it is thought the appointment will be announced in the coming weeks.
Townsend will be tasked to commit about 80 percent of the capital into core real estate investment funds although investment managers with more opportunistic strategies will welcome the news that the remaining 20 percent is to be deployed into vehicles with special situations mandates. Geographically, the investments are expected to be split a third each to North America, Europe and Asia.
The firm is expected to deploy the capital in between 12 and 18 months and to make commitments of between $30 million and $50 million each. Investments are expected to yield a return in excess of 10 percent, based on the blend of core and special situations outlays.
Townsend was understood to have been picked because of its wide spread of investment manager relationships and its previous experience working with the world’s biggest institutional investors on similarly bespoke investment mandates. According to sources familiar with this mandate, GPF had devised its own strategy and was looking for an investment manager to execute it rather than to be offered a strategy devised by the manager.
GPF’s ambition to shift emphasis to global real estate investments forms part of an organisation-wide emphasis on deploying capital outside of Thailand. According to a report by Bloomberg in April this year, the state pension started investing in overseas equities and commodities and shifted away from predominantly buying domestic bonds – though they still account for 67.5 percent of its assets – in an effort to mitigate increasing domestic inflation.
Simultaneously, GPF is understood to have recognised a window opportunity to make discounted real estate investments across the world’s core property markets where, in many instances, values are still recovering, and where some owners of non-distressed property are nonetheless in distressed situations and must sell.
Neither GPF nor Townsend would comment.