"The broad real estate markets are in transition," says TownsendGroup principal Micolyn Yalonis in an executive summary of therevised investment strategy, a five-year planning document that isreviewed annually. "Re-pricing is expected but has not begun toclear within market transactions or asset valuations."

Given that the Core portfolio is projected to be 49% at the endof 2010 and the longer-term goal is 30%, "Townsend does notrecommend new Core allocations and will instead continue to focusnew allocations in the non-core strategies," states an executivesummary of its real estate investment recently approved by theSFERS' Board of Retirement. Specific strategies will be reviewed bythe Board later this year.

In the Non-Core sector, Townsend says it will focus its duediligence efforts and resulting recommendations on niche strategies(e.g. non-traditional property types, unique market opportunities)and international opportunities for excess returns. Morespecifically, Townsend says it will look for "Value and High Returnpooled funds capable of providing unique access to opportunities(property type, platform, property life cycle) and advantageousfunding capabilities (pre-specified pools and/or short investmentwindows) to facilitate maintaining the funded status of theprogram."