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Maryland Retirement System sells direct portfolio

The pension plan has sold a Georgia shopping center for $76.3 million as part of a plan to shed its direct real estate holdings in favour of commingled funds.

Nearly two-and-a-half years after announcing its intention to shed its direct real estate holdings in favour of commingled funds, the Maryland State Retirement and Pension System has begun to implement that plan by selling one of its remaining assets: a shopping centre outside of Atlanta.

The Baltimore-based pension plan sold Camp Creek Marketplace, a 424,715-square-foot shopping centre in East Point, Georgia, to Cole Capital Partners for $76.3 million, or roughly $172 per square foot. Maryland had purchased the property in 2003 for $82 million.

Cole Capital, which declined to comment on the deal, is a Phoenix-based real estate investment firm that targets income-producing commercial properties. Tenants in Camp Creek include BJ's Wholesale Club, TJ Maxx and Barnes & Noble.

In addition to the Camp Creek asset, Maryland has put two other shopping centres with a combined 235,286 square feet of space on the sales block. Mike Golden, director of external affairs for the pension plan, would not disclose details on those properties other than to say that selling off these assets are part of a larger plan to dispose its remaining properties owned through separate account relationships while investing proceeds into commingled funds.

Indeed, Maryland’s strategy shift has been a long time coming. In February 2009, the pension plan's board of trustees announced it should wind down its direct real estate investment programme. However, the global credit crisis curbed implementation of the strategy until this year.

“We've been waiting for the right market conditions and are selling off the properties we've owned outright one at a time,” said Golden. “Rather than owning a set number of properties, we can get greater diversification in our real estate programme going into commingled funds.”

With the sale of the Camp Creek shopping centre to Cole, a total of five directly-owned properties remain in the pension plan's portfolio. Golden added that Maryland, which currently has $38.2 billion in assets, hopes to sell off its remaining direct properties by the end of the year.