Oklahoma Teachers' Retirement System, Oklahoma City, hired real estate managers AEW, Heitman and L&B Realty Advisors to run a combined $425 million, pending contract negotiations, according to James Wilbanks, executive secretary.
It's the $8.7 billion system's first investment in real estate and constitutes about 5% of total assets.
Mr. Wilbanks said in a telephone interview that the system's investment staff and the fund's general consultant, gregory.w.group, will recommend how much each firm will manage.
Choosing three managers was a “diversification play,” Mr. Wilbanks said, adding that each firm has a distinct investment style focusing on different geographical regions and weighting of property types.
“For example, one of the three invests in self-storage; they've had good results there,” Mr. Wilbanks said. “The other two don't do anything in that space. One of the other three has significant weighting in the Midwestern U.S. and the other two don't, so there are real differences in approaches.”
Mr. Wilbanks said the allocation will be funded from the system's domestic equities allocation, which will be reduced from a target of 53% to 48% as capital calls come in over the next six to 18 months.
Separately, the board at its Wednesday meeting unanimously voted to seek an opinion from Oklahoma Attorney General W.A. Drew Edmondson on the State Board of Education's decision to direct a required $35 million employer contribution away from the system to be used for educational programs.
Mr. Wilbanks said the Oklahoma Legislature's state budget this year did not require the board of education to direct the funds to the pension plan, as it has in years past.
He said an opinion from Mr. Edmondson is legally binding and could require the board to make the contribution. Mr. Wilbanks said the letter has not yet been drafted.