Overview
International Paper, a large manufacturing company, partnered with PGIM Real Estate to provide its defined contribution (DC) plan participants access to daily-valued private real estate.
Key Partners
- International Paper's DC investment committee overseeing a $6B DC plan
- Recordkeeper
- Consultant
- Managed account provider
- PGIM Real Estate DC team
Challenge
International Paper wanted to provide plan participants access to private real estate while maintaining guardrails to avoid overallocation to the asset class, requiring buy-in from numerous partners.
Approach
Taking into consideration the goals of the DC investment committee and the investment and operational hurdles of the plan's key partners, multiple access points were ultimately implemented to allow participants to access private real estate as a standalone option with a maximum allocation limit of 25%, as well as through the plan's third-party managed account service.
Solution
While the initial mandate centered on offering private real estate as a standalone option, the final implementation also included the private real estate fund in the plan's managed account service. This required numerous phases over an eight-month period.
- We closely collaborated with International Paper's consultant to have the investment underwritten and approved.
- We then worked with the recordkeeper to meet the operational requirements to add the fund to the core lineup.
- After a robust education process, International Paper strongly advocated for their managed account service to include the real estate investment in their asset allocation, which was a first for the managed account provider and the industry.
- In order to deliver this innovative solution, frequent communication and coordination across key constituents was required throughout the process.
- International Paper received an Innovation Award from Pensions & Investments for their introduction of private real estate to their DC core lineup and managed accounts service.
Case studies are provided for illustrative purposes only and results may vary.
