Miami employee pension fund divests REIT portfolio

The Miami General Employees & Sanitation Employees Retirement Trust had $27 million in portfolio

Miami City Hall (Credit: Wikimedia Commons)
Miami City Hall (Credit: Wikimedia Commons)

The City of Miami General Employees’ & Sanitation Employees’ Retirement Trust (GESE) is divesting from real estate investment trusts following an asset-liability study.

GESE eliminated its target 5 percent real estate investment and will instead increase its target investment in core fixed income by and domestic large-cap core. The trust had a 4 percent allocation in real estate as of September 30, 2017 and a total of $27 million in its REIT portfolio, according to Pensions & Investments. It also dropped its target for domestic small cap equity and international equities.

Nationwide, REITs collectively performed worse than the soaring stock indexes last year. The FTSE NARIET All Equity REITs index rose just 8.7 percent to the S&P 500’s 21.8 percent. The index is down 2.4 percent so far this year. Investors point to expected interest rate increases and the recent federal tax reform as reasons for the poor performance. REITs do not pay income taxes, so do not benefit from the tax reform as much as some other sectors.

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The city of Miami trust manages funds for general and sanitation employees of the city and was established in 1985 “to serve permanent employees other than firefighters and police officers.”

[Pension & Investments] — Dennis Lynch