Rep. E. Clay Shaw Jr., R-Fla., plans to reintroduce a bill this month that would make it easier for REITs to attract investors.
The Real Estate Investment Trust Simplification Act includes a section that would ensure REITs are not disqualified if they fail to ask shareholders their ownership interests each year. The legislation suggests REITs pay fines for not collecting the information, which is used to prove that ownership is not concentrated among five or fewer investors.
The legislation also would let REITs use a nominal amount of rental income to perform unusual services for a tenant without losing the ability to count the entire rental income. The bill also would correct a technical glitch so that an investor's business partners would not end up also being considered owning a share in a REIT.
The Federal Reserve Board Open Markets Committee left short-term interest rates unchanged at the conclusion of a two-day meeting that ended today. Apparently convinced the economy is on the right growth track and seeing little evidence of an inflationary flare-up, the Fed held the 5% discount rate and the 5.25% federal funds rate steady at least until its March 25 meeting.
Proposed changes in pension accounting disclosure under consideration by the Financial Accounting Standards Board could be expanded to include more detailed information on defined benefit plan investments. John Hepp, FASB project manager, said some board members felt additional information on significant concentrations of investments should be disclosed, allowing users of financial statements to measure the risks presented by such investments.
However, Mr. Hepp said he does not support such disclosure because investments already are reviewed by the DOL and PBGC.
The FASB exposure draft on proposed pension disclosure rules could be issued for comment before May.
California state Controller Kathleen Connell said the California State Teachers' Retirement System's investment return was 301 basis points less than sister fund CalPERS for 1996, which amounts to an opportunity loss of $1.8 billion. Ms. Connell said she was ``horrified'' at the performance of the $68 billion teachers' fund, based in Sacramento. Ms. Connell, an ex-officio member of the board, blamed part of the underperformance on a TAA fund run by Tom Flanigan, the fund's CIO. Mr. Flanigan, saying ``this ship is not sinking,'' added the fund has only two quarters of poor performance. Ms. Connell and other board members indicated they want to move quickly to improve performance.
Kimball International, Jasper, Ind., restructured its $270 million defined contribution plan after an asset allocation study, said Kenneth Sendelweck, vice president and assistant treasurer.
International equities, domestic small-cap value and mortgage-backed securities were added as asset classes.
Seven new managers were hired: Brandes for international equities; Capital Technology and 1838 Investment Advisors, small-cap value; Pacific Financial Research, large-cap value; Hyperion and BlackRock, mortgage-backed securities; and INVESCO, intermediate-term and government bonds. Officials terminated two equity managers and one fixed-income manager.
Mr. Sendelweck would not disclose the names or the new asset mix. McDonald & Co. assisted.
Pontiac (Mich.) Retirement System committed $13 million to a commercial mortgage investment pool from Capozzoli Advisory for Pensions.
The $300 million City Employees Retirement System and the $177 million Policemen and Firemen Retirement Fund will place $6.5 million each with the real estate manager, that will come out of cash and investment income, said Pamela Hopkins, retirement coordinator for the city. Merrill Lynch Consulting Services assisted the city employees; Callan Associates is the consultant to the policemen and firemen fund.
Separately, Ms. Hopkins will be leaving the retirement system in June to join Munder Capital Management in the client services area. The city will be seeking her replacement.
City of Lansing, Mich., hired its first international managers for its $180 million police and fire retirement system and a new trustee for all of its retirement systems.
Walter Scott and Harding Associates will manage $4 million each in international equities, said Steve Dougan, operations analyst.
The $8 million will come from existing domestic equity investments. Officials decided to diversify to keep from exceeding a 55% limit in domestic equities, he said. The $130 million general retirement system also is considering hiring additional international managers in the future.
Also Northern Trust Co. is replacing First Chicago NBD as trustee for both systems.
The Hannah Group assisted