The Ohio Police & Fire Pension Fund (OPFP) is making a concerted effort to build out its real assets portfolio, after the board approved a pacing plan to invest $290 million in the asset class throughout the 2019 calendar year.
The pacing plan specifies that the $14.7 billion institutional investor will make commitments aggregating to approximately $170 million to non-core real estate investments, with none in core real estate, and $120 million in real assets (timber, agriculture, and infrastructure).
Real estate is already near its 12% target allocation, with $1.68 billion invested in the asset class, representing 11.28% of the Columbus-based pension’s portfolio. The three largest investments in the portfolio are the Heitman Core Property Fund ($143 million), the JP Morgan Strategic Property Fund ($213 million), and Prudential PRISA ($208 million).
The pacing plan anticipates that the pension will make three $50 million to- $75 million investments throughout the year in real estate.
Real assets, on the other hand, is relatively far from hitting its 8% target allocation, currently standing at 2.5% and valued at $287 million. There are only eight investments in the portfolio to date, five in timber, two in infrastructure, and one in agriculture.
Infrastructure will be prioritized in the scheme, with agriculture coming second and no investments expected in timberland. Private infrastructure has been trending amongst institutional investors lately, since the characteristics of a long-term investment with stable, sometimes predictable cash flows fit the long-term and risk-adverse nature of public pension plans.
The OPFP has engagements with two infrastructure managers to date: the IFM Global Infrastructure Fund, an evergreen fund with an international remit, and Meridiam Infrastructure North America III, a closed-end private equity fund with a mandate on greenfield public-private partnerships based in North America.
The pension’s long-term policy benchmarks for real estate and real assets are 12.0% and 8.0%, respectively.