The Alaska Permanent Fund Corporation may reduce its allocation to real estate to 11% from the current 13% as part of a change to the sovereign wealth fund's asset allocation mix.
Alaska Permanent said in meeting documents that the rationale for the proposed changes, which could begin in 2025, stems from a belief that investing in real estate has become less attractive than it was 12 months ago.
If approved, the proposed asset allocation would simplify Alaska Permanent's real estate investment strategy: Real Estate Investment Trusts (REITs) and their benchmarks would be eliminated, and the NCREIF NPI Index would become the sole reference point for real estate performance.
Alaska Permanent's REIT portfolio is valued at $968 million (€893 million) at the end of 2023, accounting for 12% of the sovereign wealth fund's $8.2 billion real estate portfolio.
The remaining assets in the real estate portfolio are comprised of 81% real estate equity, valued at $6.68 billion, and 7% real estate debt, valued at $599 million.
Alaska Permanent has begun reducing its exposure to REITs by redeeming $200 million from its existing REIT portfolio in the first quarter of this year.
During this period, the sovereign wealth fund approved and funded approximately $550 million in credit facilities secured by individual real estate properties.
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