Retirement insights from a Colorado PERA perspective

Inside Colorado PERA

Asset Classes Explained: Real Estate

This article is a part of Asset Classes Explained series
  • Part 1

    Asset Classes Explained: Global Equity

  • Part 2

    Asset Classes Explained: Fixed Income

  • Part 3 – Currently Reading

    Asset Classes Explained: Real Estate

  • Part 4

    Asset Classes Explained: Private Equity

  • Part 5

    Asset Classes Explained: Alternatives

Note: This article is part of a series highlighting each of PERA’s investment asset classes and how they contribute to a diversified portfolio that provides reliable income to Colorado’s retired public employees.


Stocks and bonds — also known as Global Equity and Fixed Income — make up about 70% of PERA’s investment portfolio, but the next biggest asset class is also an important one: Real Estate.

As of Sept. 30, 2022, Real Estate holdings accounted for about 12% of PERA’s Defined Benefit Plan assets. Those holdings include a wide variety of properties that provide steady income to help pay benefits for past, current, and future public employees in Colorado.

Why invest in Real Estate?

A key benefit of investing in Real Estate is the reliable income those investments can provide. PERA owns properties for which tenants pay rent, and that rental income is an important source of cash flow for the plan.

That reliable income also helps diversify PERA’s portfolio by reducing the risk of losses when other assets, like stocks, see a decline in value.

“Real Estate provides a low or negative correlation to Global Equity and Fixed Income,” said C.H. Meili, PERA’s Director of Real Estate. “That means when we see declines in the markets, Real Estate often holds steady or even performs better, providing some protection to the portfolio.”

PERA’s Real Estate holdings

A pie chart showing the various types of Real Estate properties PERA invests in as of June 30, 2022. Industrial: 39.2%, Apartment: 26.8%, Office: 13.2%, Other: 12.9%, Retail: 7.5%, Hotel: 0.4%
PERA’s Real Estate holdings as of June 30, 2022.

PERA was an early institutional investor in Real Estate, making its first investment in 1984. Since then, the plan’s investments have evolved and range from being a sole owner of a property to investing alongside other institutional investors in properties around the globe.

The vast majority of PERA’s Real Estate investments — 95% — are located in the United States, and they mainly consist of industrial, multifamily residential, office, and retail properties.

One of those investments, a large apartment complex in Dallas, Texas, has been part of the PERA portfolio for over 25 years, providing steady income and demonstrating how PERA’s Real Estate team generates value by being a long-term investor.

READ MORE: Long-Term Gain: The 25-year investment that continues to flourish

In recent years, office investments have seen weaker performance with the rise of remote and hybrid work. Meili said PERA had made the decision years ago to gradually shift its portfolio toward more multifamily residential and industrial properties and fewer retail and office investments.

Office properties made up about 13% of PERA’s Real Estate portfolio as of June 30, 2022, and Meili said PERA remains focused on investing in properties that have the potential for growth over long periods of time.

“While office investment performance has weakened recently, PERA is a long-term investor, and that encompasses many market cycles with ups and downs throughout,” Meili said.

PERA’s Real Estate portfolio includes direct ownership and real estate funds with other investors. Direct ownership provides the real estate team the ability to maintain control over important decisions and effectively manage the investments to meet the needs of PERA members.

“We believe in a well-diversified property and market portfolio with high levels of income-oriented investments,” Meili said. “Our focus is to provide the best-possible risk-adjusted returns for the PERA members and retirees who rely on us, and every investment decision is made with that goal in mind.”

More information about PERA’s investments:

Global equityA type of investment that includes publicly traded stocks in companies based in the United States and abroad.Asset classesA category of similar investments. Common asset classes include global equity (such as publicly traded stocks), real estate, and cash.StewardshipThe practice of overseeing or managing something entrusted to one’s care. PERA’s approach to investment stewardship is focused on ensuring the financial sustainability of the fund that pays benefits to retirees and beneficiaries.StewardshipThe practice of overseeing or managing something entrusted to one’s care. PERA’s approach to investment stewardship is focused on ensuring the financial sustainability of the fund that pays benefits to retirees and beneficiaries.Defined benefitAlso known as a pension, this is a type of pooled retirement plan in which the plan promises to pay a lifetime benefit to the employee at retirement. The plan manages investments on behalf of members, and the retirement benefit is based on factors such as age at retirement, years of employment and salary history.Asset allocationAn investor’s mix of stocks, bonds, and other investments. PERA’s strategic asset allocation is set by the PERA Board of Trustees.Fixed incomeA type of investment that pays investors a fixed rate of interest over a set period of time. Bonds are a common type of fixed income investment.Asset classA category of similar investments. Common asset classes include global equity (such as publicly traded stocks), real estate, and cash.Asset classA category of similar investments. Common asset classes include global equity (such as publicly traded stocks), real estate, and cash.

This article is a part of Asset Classes Explained series
  • Part 1

    Asset Classes Explained: Global Equity

  • Part 2

    Asset Classes Explained: Fixed Income

  • Part 3 – Currently Reading

    Asset Classes Explained: Real Estate

  • Part 4

    Asset Classes Explained: Private Equity

  • Part 5

    Asset Classes Explained: Alternatives

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