New York Common Retirement Fund Enters Into Joint Venture in Pursuit of RE

(May 16, 2011) — Shopping center operator Equity One Inc. has said that it will form a joint venture with the New York Common Retirement Fund, the third largest public pension plan in the United States with more than $140 billion in assets.

The venture — which will be 70% owned by the retirement fund and 30% owned by Equity One — reflects an aim to acquire grocery-anchored centers and highlights the continued rebound in the sector.

“This venture provides us with a highly regarded capital partner who shares our long term perspective on the ownership of institutional quality shopping centers,” stated Jeff Olson, Chief Executive Officer of Florida-based Equity One, which has 177 shopping centers, 10 development or redevelopment properties, nine non-retail properties and five land parcels. “This new alliance will enable us to continue our strategy of upgrading and diversifying our portfolio into the most densely populated, supply constrained markets of the country,” he said.

Earlier this year, the California Public Employees’ Retirement System (CalPERS) reported that it expected to revamp its $15.4 billion real estate portfolio, targeting mainly domestic, core or stable-income producing real estate, run by managers in separate accounts.

The decisions by both the New York Common Retirement Fund and CalPERS reflects the improved status of the sector following the financial downturn. “We had about a 40% drop in property valuations from its peak in 2007 to the bottom of the cycle which occurred in the beginning of 2010,” Mercer’s Allison Yager told aiCIO in March, following the decision by the $13.6 billion Aviva Staff Pension Scheme to up its allocations to real estate-related assets to 15% over the next two years. “Since then, investors have returned to the real estate market and made sizable commitments, but there’s no way to know if we’ll ever return to the pre-crisis peak.”

Yager noted that she is witnessing more and more clients express interest in having an allocation to real estate in an effort to achieve greater diversification.