The GRS pension fund loaned $9 million toward the Book Cadillac project, while the police and fire plan backed a $15 million loan from First Independence Bank. “The Book Cadillac was a dog.”īoth pension funds were involved in a complex 2006 financing transaction that renovated the Book Cadillac Hotel. “There's still garbage in the portfolio that needs to be cleaned up, and we're working hard on that,” Mr. In the future, the retirement systems are more likely to participate in a commingled real estate fund with other investors. Some real estate deals were tied up in the corruption scandal, while others were bad investments, like the Westin Book Cadillac Detroit hotel, pension fund officials said. Bigelow said.īoth pension funds are also shifting away from individual real estate investments and are shedding properties when possible. The city's $2 billion General Retirement System, meanwhile, could hire multiple firms to oversee the pension fund's fixed-income portfolio early next year as part of a broader restructuring. The return target was set by the two pension funds during the city's bankruptcy case. The stock strategy also could help the pension fund reach its assumed annual investment return of 6.75%, he added. “Low-volatility stocks don't always lead to the highest return, but it does provide a little protection when the markets are really frothy or when there is significant downward pressure,” Mr. The post-bankruptcy landscape includes pension fund babysitters and new investment rules aimed at preventing the sort of bribery and kickback scandals that saw five former pension fund officials and businessmen convicted of federal crimes this fall.īy the end of November, the $3.3 billion Police & Fire Retirement System could hire two firms to manage a $150 million investment in global low-volatility stocks, said Ryan Bigelow, the pension funds' investment officer. The pending investments follow a lengthy review of the pension funds' investment portfolios and changes made in asset allocation. The pension funds are at a pivotal moment to pick new investments designed to reap returns for participants reeling from pension and benefit cuts that helped Detroit exit the largest municipal bankruptcy in U.S. Detroit's two pension funds are poised to invest money for the first time since the city emerged from bankruptcy and a public corruption scandal cost retirees more than $97 million.

Rob snell detroit free press