Florida State Board of Administration, Tallahassee, is searching for global REIT managers, the result of changing its $904 million real estate investment trust program to all global from domestically oriented, said Kevin SigRist, deputy executive director of the board.
The board is seeking to add at least two global REIT managers and is also evaluating its existing REIT managers to decide which can move into the $141.2 billion FSBA’s new global REIT program and which will be terminated.
Wilshire Associates, an investment consultant to the board, is assisting in the search, which is being conducted without an RFP, Mr. SigRist said. Wilshire and FSBA staff are putting together lists of potential new manages and existing managers to evaluate for the new program.
REIT managers interested in being included in the search can conduct Wilshire for consideration, Mr. SigRist said.
The board plans to keep the search open until early November and could decide on hirings by the end of the year, he said.
The board plans to keep its existing 0.7% target allocation to the REIT program for the $117.2 billion Florida Retirement System defined benefit fund, although funding for individual REITs hasn’t been determined. FSBA oversees the FRS.
Separately, the $109.3 billion Florida Retirement System, overseen by the FSBA, can afford to cover only 87.9% of the benefits it promised because of losses from the recession since 2008, according to the state’s actuaries. Robert S. Dezube, consulting actuary for Milliman, told the Florida Retirement System Actuarial Assumption Estimating Conference on Tuesday that the plan’s underfunding widened from 89.3% last year.
Fund gains of 9.7% for the year ended June 30 weren’t enough to outweigh the losses recorded due to a “smoothing” technique that spreads large declines or increases over five years.
Florida remains well over the minimum 80% funding level recommended by experts, according to the Pew Center on the States. In 2008, the state was one of only four to have a fully funded pension system, the Pew Center said in a February report.
In May, Gov. Charlie Crist vetoed a bill that would have increased contributions to the pension fund to make up for the unfunded liabilities starting in fiscal 2012.
The projections were based on average annual returns of 7.75% over the long term, the same as last year, Mr. Dezube said. That return assumes that about 11% of the pension funds’ assets would go into so-called alternative investments, including private equity and hedge funds, Mr. SigRist said.
Bloomberg contributed to this story.
