The $42.9B Nebraska Investment Council is considering hiking exposure to infill, last-mile logistics, and light industrial — sectors that benefit from e-commerce demand and onshoring within the U.S. — as it sets a pacing plan for up to $200M for next year.
At a recent investment meeting, the pension plan committed between $150M to $200M, with a target commitment of $170M, across four to six funds, with ticket sizes for each ranging from $25M to $50M. Along with the pacing plan, Mike Krems, partner at Aksia presented the board with long-term investment recommendations:
- Continue consolidating commitments with top-performing managers, particularly with core open-ended funds.
- Seek to consistently deploy capital across vintage years.
- Consider incremental redemptions from open-ended funds if exposure becomes too overweight.
- Continue increasing exposure to value-add real estate strategies.
- Continue to selectively add exposure outside North America, particularly Europe and developed Asia.
In addition, Aksia also presented the board with tactical investment recommendations:
- Increase exposure to sectors that benefit from secular tailwinds, demographic trends, and favorable
supply/demand dynamics. - Consider increasing/adding exposure to infill, last-mile logistics, and light industrial, which benefit from
e-commerce demand and onshoring within the U.S. - Consider increasing exposure to core-plus open-ended funds, particularly in targeted sectors such as
industrial and alternative housing.
Currently, the real assets portfolio is dominated by investments in North America; however, next year the plan will also selectively add exposure outside of North America, particularly in Europe and developed Asia.
Aksia disclosed during the meeting materials that real estate transaction volume and deal value for full-year 2024 surpassed that of 2023, reversing the downward trend experienced since 2021. That said, real estate deal activity, both in deal value and number of deals, remains significantly below the last peak in 2019.
The NIC has a 7.3% target allocation for its real assets portfolio, which includes real estate, natural resources, and infrastructure.
Aksia also noted that, with infrastructure, “elevated interest rates continue to challenge fundraising.” It pointed to a slowdown in distribution activity that has further impacted fundraising. “We expect an increase will be necessary for allocations to rebound. Momentum in power and digital infrastructure may support a 2025 recovery.”
As of March 31, 2025, the real assets portfolio had returned 0.1%, -4.6%, and 2.2% for its one-, three-, and five-year returns against respective benchmarks of 1.2%, -5.1%, and 1.9%.
Managers on the roster include PGIM Real Estate, Morgan Stanley, and Torchlight Investors, among others.
