HARRISBURG, Pa. - The Pennsylvania State Employes' Retirement System plans to pare the number of alternative investment limited partnerships it has, mainly by increasing the size of individual fund commitments and weeding out existing weak performers, said Erica Bushner, director-venture capital/alternative investments.
The fund has 35 partnerships. Its average commitment to a venture fund is $15 million to $25 million, and $40 million to a buy-out fund.
Increasing the size of commitments makes sense, because a $1 million commitment requires the same due diligence as a $100 million commitment, she said.
The consolidation may bode well for existing general partners raising new funds. "They do have a leg up on other (partnerships in the market) if their returns have been good,"she said.
TOKYO - Two-thirds of Japanese real estate investors said they will begin to sell their U.S. property holdings this year, and hotels and office buildings, primarily in Hawaii and California, will be the first to go, according to a Kenneth Leventhal & Co. survey of Japanese lenders and property owners.
But the speed with which these transactions will occur will hinge on whether the Ministry of Finance will allow Japanese investors to take tax losses on the sales, according to the survey of 140 real estate executives.
Also affecting sales are Japanese expectations that they will recover 70% to 100% of their original investment. U.S. property values have dropped 30% to 50% since the late 1980s.
"There clearly is a gap between pricing expectations of the Japanese and current market values," said Jack Rodman, director of Pacific Rim activities at Kenneth Leventhal, who conducted the survey in Tokyo.
"We expect to see $3 billion to $5 billion in sales of Japanese real estate in 1994," he said. The company estimates Japanese investment in U.S. property totals $77 billion.
BOSTON - The $7.4 billion Massachusetts State Teachers & Employees Retirement System decided not to hire an alternative investment consultant, citing cost.
"We did not accept any of the bids. The fees associated with the bids were more than we anticipated, given the relatively small allocation to alternative investments (3%). The committee has decided to go through an asset allocation process first before deciding whether to proceed further," said Joseph Craven, deputy treasurer.
SACRAMENTO, Calif. - A proposal for the California Public Employees' Retirement System to invest in real estate securities may be in trouble.
The fund's investment committee deferred approval of an RFP for 90 days to allow Sheryl Pressler, the chief investment officer, to review the fund's real estate investment trust policy and report back to the committee.
Ms. Pressler couldn't be reached for immediate comment, but it is anticipated she will say that conditions now for investing in REITs might not be right.
CHICAGO - Look for the Ameritech Corp. pension fund to make more of its alternative investment commitments in Asia.
Douglas Park, director of private transactions of the $15 billion pension fund, sees a "tremendous amount of opportunity" in Asian private equity investments.
Speaking at a recent conference, Mr. Park said a trip to Asia reinforced how the region is not a monolith; individual markets are not necessarily correlated with each other.
"There are certainly returns to be captured there. Eventually the private markets in Asia will be bigger than the ones here ... perhaps bigger than Europe and the U.S. combined," he said. "We would like some presence there today."
Currently the fund has 96 limited partnerships; 72 are venture capital, 16 are corporate finance (buy-outs as well as restructuring and mezzanine finance funds) and eight are international.
LOS ANGELES - Trustee Simon Russin is worried Los Angeles County could fail to make its contribution next month to the $14 billion Los Angeles County Employees' Retirement Association.
The county is trying to balance its budget and asked the pension fund to fork over $150 million. There is no money available in surplus retirement earnings to meet the county's request, Mr. Russin said.
Meanwhile, in a report to the pension fund's board of trustees, an actuary for Towers Perrin said the pension fund's unfunded liability is now $2.3 billion, an increase of $362 million for the year ending June 30.
Mr. Russin said the increase is due to pension spiking (increasing pension benefits by adding the value of fringe benefits to salaries for the purpose of computing pension pay) and an early separation program during the previous year.
SACRAMENTO, Calif. - The bailout by pension funds from troubled Canadian property company Cadillac Fairview Corp. Ltd. continues with the $1.3 billion Sacramento County Retirement System.
Chief Investment Officer Christopher Ailman confirmed the county fund sold its position in the company. The fund invested $44 million in 1988; Mr. Ailman wouldn't say how much the fund received when it sold its position. He also declined to identify the buyer.
The largest investor in Cadillac Fairview, the $89 billion California Public Employees' Retirement System, is negotiating to sell its $300 million position, confirmed Charles P. Valdes, chairman of the fund's investment committee.
BNP/N&B Global Asset Management, the joint venture between Banque Nationale de Paris and money manager Neuberger & Berman, won approval to begin offering domestic equity investment management to U.S. clients.
The firm already has more than $875 million under management from overseas clients. In the United States, it will offer global asset management.
It also will act as investment adviser to the Neuberger & Berman International Fund, an open-end international equities mutual fund.
WASHINGTON - Lens Inc., the Washington-based relationship investing fund sponsor, might target foreign firms for its corporate governance activities in the coming year for the first time, said Nell Minow, principal.
Specifically, the fund is looking at some British companies, as well as a Japanese and Australian firm.
WASHINGTON - The Securities and Exchange Commission will give additional guidance to public companies on the disclosure of derivatives and other risk management activities, said Brandon Becker, director of the agency's division of market regulation.
In his testimony at a congressional hearing, Mr. Becker said the decision was based on a review of 1993 annual reports.
He said the guidance will be published in time for companies to use it in preparing their 1994 annual reports.
The research firm Washington Research Group has merged with Mabon Securities, an investment banking and brokerage firm. WRG, which had provided research for institutional investors and corporations since 1969, will become Mabon's research division and provide it with exclusive political and economic analysis.
It also will continue an existing exclusive arrangement with Credit Lyonnais in France to provide research to CL divisions and French companies.
CHICAGO - Centurion Trust Co., which runs $170 million in hedge funds, managed futures and other alternative strategies under a fund-of-funds approach for the Virginia Retirement System and other tax-exempt institutional investors, changed its name to Glenwood Trust Co.
The firm made the change to avoid confusion among clients and potential clients and to provide the appearance of a closer link with its sibling company, Glenwood Investment Corp., which also runs about $170 million in alternative strategies for taxable investors.
Both Glenwood Trust and Glenwood Investment have the same owners, Frank Meyer and Howard Gottlieb, and share the same investment staff.