New Mexico SIC to restructure real estate portfolio, plans $1b of annual commitments to reach target

The New Mexico State Investment Council (NMSIC) has approved a new structure study for the council’s real estate portfolio, which seeks to narrow the core and core-plus strategies’ allocation ranges and to broaden the noncore strategy.

The NMSIC is looking to increase its target noncore real estate exposure to 60 percent, up from the current 40 percent, and modify permissible ranges of core and noncore to accommodate private market investment attributes. For the year ending Dec. 31, 2023, 10 new noncore commitments were made, totaling approximately $1.025 billion.

Currently, the core component of the NMSIC real estate portfolio represents 63 percent of the total portfolio against a neutral point of the range at 55 percent. NMSIC said it will likely favor noncore, closed-end strategies for new capital deployments until core valuations fully reflect the new environment, which could take as many as six quarters from the bottoming of public real estate markets.