For the Illinois State Board of Investment, a property in the Boston area might be almost worth its weight in snow removal.
ISBI, which budgeted $35,000 for snow removal for a warehouse it owned in Franklin, Mass., wound up spending more than $500,000 through Feb. 17 at least.
The unexpected rise in spending of more than 1,328% is the result of the winter's extraordinary snowfall. Boston's snow totaled 108.6 inches as of March 16, breaking the record as the city's snowiest season, according to The Weather Channel LLC.
“The big expense is snow removal from the roof,” said William R. Atwood, executive director of the Chicago-based ISBI, which oversees $15.1 billion in defined benefit assets and $4.1 billion in 457 plan assets. “You can't put a snow plow up there. You've got to get the snow off the roof. Every building in Boston has the same problem,” adding to the demand for snow removal services.
The 236,000-square-foot warehouse, used for logistics by a number of different companies, was sold by ISBI on March 5 for $13.8 million. The sale was triggered by a change in ISBI real estate strategies and unrelated to the snow issue, Mr. Atwood said.
The property was a residual part of a separate account real estate portfolio managed by CBRE Global Investors LLC that ISBI is unwinding. The portfolio now has $17 million in assets. ISBI is reallocating the proceeds to CBRE U.S. Core Partners LP, which has $183 million of ISBI assets.
“We are able to get better diversification and fees,” in the commingled fund, Mr. Atwood said.