AMB Institutional Realty Advisors became the first traditional pension fund real estate manager to receive permission from its investors to roll up the investors' property holdings into a $2 billion REIT for eventual sale to the public, according to several industry sources.
AMB held a shareholder's meeting yesterday, but proxy voting already confirmed a sufficient number of investors approved the proposal, allowing the firm to reach the $1.2 billion threshold needed to make it appealing to REIT investors, industry sources said.
Two-thirds of the proposed REIT's assets will be warehouses, and one-third, shopping centers, said several sources. Morgan Stanley & Co. Inc. is the deal's underwriter. Officials with AMB declined to comment. Telephone calls to Morgan Stanley were not returned.
AMB's investors include the pension funds for Ameritech Corp. and Bell Atlantic Corp., CalPERS, CalSTRS, Kamehameha Schools Bernice Pauahi Bishop Estate, San Diego City Employees' Retirement System, San Francisco City & County Employees' Retirement System, Los Angeles County Employees' Retirement Association and the University of Missouri System.
Many U.S. pension funds are reviewing their relationships with Chancellor LGT following the departure of Warren Shaw, global CIO and CEO, announced last week and will be effective at the end of the year.
The Contra Costa County Employees Retirement System, Concord, Calif., and the Chicago Policemen's Annuity and Benefit Fund will be reviewing the situation at board meetings later this month. The firm manages about $55 million in small-cap equities for the Contra Costa system and an undisclosed amount in venture capital for the Chicago fund.
The Washington State Investment Board, Olympia, earlier this week put Chancellor LGT on a watch list to assess the changes, said Nancy Calkins, senior investment officer of public equities. The firm manages $515 million in Pacific Rim equities for the board.
Pennsylvania Public School Employees' Retirement System, Harrisburg, approved a plan to hire four firms to run 20% of the fund's total assets in global portfolios, said John Lane, CIO. A search for the managers will be conducted by the end of the year. The effect on the $41 billion system's existing managers is unclear at this point, he said.
The board also approved a $30 million commitment in a venture capital fund that will make investments in Pennsylvania. The fund's general partner is Safeguard Scientific.
The board also increased its commitment to SCP Partners, a private equity firm, to $62.5 million or 25% of the total assets, whichever is less. The board initially committed $25 million, but the partnership's total assets increased. The board wanted to maintain the fund's percentage investment, said Mr. Lane.
The Los Angeles City Employees' Retirement System's board has given its staff authority to negotiate the sale of the $6.2 billion fund's $14.7 million share of the O'Connor Group's $1.1 billion Retail Property Trust. The decision was made in executive session and no further information was available.
Arlington County Employees' Retirement System, Arlington, Va., terminated Loomis Sayles as a U.S. large-cap equity manager and pared the large-cap stock portfolio of BEA. The money will fund a $160 million TAA portfolio for Mellon Capital.
The fund took $115 million from Loomis, $35 million by shaving its bond portfolio and the rest from the terminated stock portfolio. The remaining $45 million for Mellon came from BEA. The $800 million fund terminated Loomis because of the fund's overexposure to large-cap stocks, said Bruce O. Kallos, administrator.
SEARCHES & HIRINGS
AAI Corp., Hunt Valley, Md., is searching for managers to add two or three funds to its roughly $100 million 401(k) fund.
International equities and U.S. growth equities are among the types of funds being considered. Also, it is looking at managers to add to the five or six funds from Fidelity, which now provides bundled services. Hewitt is assisting. A decision could be made in late October.
Guinness America-United Distillers North America Inc., Stamford, Conn., hired Putnam Institutional Management to run $17 million in core growth equity. Putnam replaced another core growth equity manager, said James Ricci, director of credit, cash and risk management for the $100 million fund. He would not name the firm. Evaluation Associates assisted.
Alaska Permanent Fund Corp., Juneau, hired Bank of New York as the global custodian for the $23 billion fund. It replaces Brown Brothers Harriman. "This move was based on price,'' said Peter Bushre, CFO. Bank of New York was already the fund's domestic custodian.
Michigan Glass and Glazing Industry, Local 357, Hazel Park, Mich., hired Putnam Institutional Management to run a $13 million balanced portfolio for its $30 million defined benefit fund. The portfolio had been run by a local branch of First of America Bank