Two pension funds - the $5.1 billion Pacific Gas and Electric Retirement Plan, San Francisco, and the $2.7 billion Milwaukee Employes Retirement System - hired consultant The Townsend Group to operate as a manager of managers for real estate, combining the duties of investment management, consulting and internal staff functions. Townsend will design and implement the funds' real estate investment strategy and will have the discretion to hire and fire managers, said Townsend Principal Kevin Lynch.
Frank Russell was the former real estate consultant for PG&E; Russell had been Milwaukee's real estate manager of managers.
Milwaukee replaced Russell because of poor performance, said Patrick Cronin, financial manager for the Milwaukee system. A Russell spokesman declined to discuss the issue. Townsend has already put together a $35 million multiple-manager REIT portfolio for Milwaukee, said Mr. Lynch. He declined to identify the managers.
PG&E opted for the manager-of-manager structure because it wants to invest in real estate in the same manner it invests in stocks and bonds, said Peter Corippo, manager, investments and benefits finance.