$81B Public Fund Looks To Pivot Away From Office And Retail With High-Profile Sales
The largest U.S. sovereign wealth fund is looking to rebalance its real estate holdings, shedding assets that weighed on its first-quarter returns.
The Alaska Permanent Fund is looking for buyers for some of its retail and office properties to reinvest the raised cash into multifamily and industrial assets. The $81B fund is planning to maintain the same 10% exposure to real estate while diversifying its portfolio.
The disclosure was made during the quarterly meeting at the end of May for the Alaska Permanent Fund, a quasi-independent state agency established in 1976 to invest proceeds from Alaska’s oil and mineral mining operations.
During the meeting, Chief Investment Officer Allen Waldrop outlined the fund’s effort to offload some or all of its 50% stake in two properties, the Tysons Corner Center shopping mall in Washington, D.C., and an office building at 299 Park Ave. in New York City, according to minutes from the meeting.
The fund returned 4.55% in the first quarter, outperforming its internal target, but was weighed down by weakness in the office sector.
The 1.8M SF Tysons Corner Center, anchored by Nordstrom, Bloomingdale’s and Macy’s, was refinanced for $710M in December 2023 as part of a five-year CMBS loan with a 6.6% interest-only payment rate. The Alaska Permanent Fund jointly owns the property with retail landlord Macerich, with the debt backed by a group of lenders led by Deutsche Bank.
An October 2023 appraisal of the property valued it at $1.8B, according to Morningstar Credit.
The mall’s owners are also moving ahead on a plan to redevelop a vacated Lord & Taylor with either multifamily or office space as they look to reposition the property as a mixed-use destination.
The 44-story Park Avenue office tower also up for sale spans 1.3M SF and is jointly owned with Fisher Brothers. The property — backed by a five-year $500M CMBS loan that was issued in February — is fully leased, with its largest tenants including Capital One and UBS, according to Morningstar Credit. An appraisal in November 2024 valued the office tower at $1.1B.
During the fund's first-quarter meeting, board members also discussed the fund’s balance of REIT and direct real estate investments, although the minutes don’t reflect any change in investment strategy beyond an effort that began in 2020 to shift some REIT allocations into fixed-income investments.
“Waldrop pointed out that REITs provided liquidity benefits but also increased volatility,” the May minutes noted.
