Ohio School Employees Adds $150M Real Assets Program
The School Employees Retirement System (SERS) of Ohio, overseeing approximately $20 billion in assets, has broadened its investment portfolio by incorporating two new funds in April, following approval from its investment committee.
SERS invested $75 million in Brookfield Asset Management’s BGTF II, a non-core infrastructure strategy, after a smaller co-investment with Brookfield the previous month. The infrastructure portfolio recorded a one-year net return of 9.44% as of February 28, 2025, with 3- and 5-year returns of 8.27% and 8.69%, respectively.
Within its opportunistic portfolio, SERS committed $75 million to SVP Special Situations Fund VI, managed by Strategic Value Partners. This strategy focuses on distressed and special situations in industries with consistent cash flows, mainly in North America and Europe. Earlier this year, the Connecticut Retirement Plans and Trust Funds allocated $250 million to the same fund.
Columbus-based SERS has advanced its real assets program, which currently holds a market value of $1.3 billion. The program emphasizes co-investment and continuation funds, with the recent inclusion of public infrastructure to enhance liquidity.
Infrastructure constitutes 38% of the portfolio, with allocations to transportation (44.9%), energy (26.9%), communications (13.2%), renewables (6.1%), social (5.2%), and utilities (3.8%). Investments are predominantly in North America (44.1%) and Western Europe (34.2%), with minimal exposure to Eastern Europe, Latin America, the Middle East, Asia, and the Pacific.
Real Estate Developments
SERS is contemplating a transition from the NPI Classic to the NPI Expanded benchmark for its real estate portfolio, as the latter better reflects its holdings, according to board documents. A formal recommendation may be submitted to the board later in 2025.
Valued at $2.2 billion, the real estate portfolio accounts for 11% of SERS’ total assets and 62% of its real assets. It achieved a one-year net return of -2.82% as of February 2025, marginally outperforming the benchmark’s -2.90%. Despite sector difficulties, projections anticipate returns of 5.5% in 2025 and 7.3% in 2026.
The portfolio is nearly entirely U.S.-based (99%), with property types distributed as follows: industrial (46%), multi-family (22%), niche sectors (16%, encompassing data centers, life sciences, student/senior/manufactured housing, medical offices, single-family rentals, and storage), office (9%), and retail (6%). Relative to the benchmark, SERS is overweight in industrial, niche, and hotel properties and underweight in other categories. Geographically, holdings are concentrated in the West (39%), East (31%), South (25%), and Midwest (6%). Ohio investments have risen from $1.7 million in FY2021 to $15 million by September 2024.
SERS staff plan to expand Midwest and Ohio investments, primarily through co-investment opportunities.