CalSTRS' real estate consultant recommended the pension fund modify its real estate allocation to 60% core, 20% value-added and 20% opportunistic, in light of current market conditions.
Going forward, Townsend Group is projecting a 7% annual return for core properties, 7.5% for value-added and 10% for opportunistic. Annualized returns for CalSTRS’ real estate portfolio over the past five years ended March 31 were 12.1% for core, 21.1% for value-added and 8.9% for opportunistic.
The current policy allocation for its real estate portfolio is 50% core, 30% opportunistic and 20% value-added.
