The investment by major pension funds in domestic and international real estate is increasing. CALPERs made a big announcement earlier this month, now the State Teachers Retirement of Ohio is looking invest an additional 100 million in real estate plus purchasing 500 million more after a major property sale from it’s portfolio.

The large pension funds are a major source of financing for the hedge funds. With the stock market nearing the top of it’s trading range and worries in the financial derivative markets, the stability of commercial real estate looks to be a good long term investment for these pension funds.

Ohio State Teachers is expected to place at least $100m into international real estate through commingled funds, particularly as both corporations and the governments are still selling real estate in Europe along with strong growth in China and an economic recovery in Japan. Its international assets are currently split to allocate 60% in Europe and 40% in Asia through 14 different commingled funds and 10 real estate managers.
That said, there is $195m worth of outstanding commitments as five of the commingled funds are still investing capital and nine funds have made all of there investments and are now selling assets. Its remaining capital is invested directly in US real estate without the aid of external managers and is focused on buying retail and apartment properties in major metropolitan areas, as Ohio State Teachers believes this is necessary to achieve a critical mass of properties in the areas for efficient asset management and benefit from the increased liquidity in those markets.  via IPE Real Estate News

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