Aldrich, Eastman arranges swap for pension fund.

Aldrich, Eastman and Waltch, L.P., has arranged a $20 million swap transaction with Morgan Stanley on behalf of a major U.S. corporate pension fund as a means to meet its client's objective to balance its overall investment portfolio by reducing its allocation to real estate investments.

AEW said the hedging transaction is intended to minimize the fund's real estate exposure for the length of the swap by allowing it to reallocate some of its real estate investments to other asset classes, such as equities and treasury notes. The concept works, AEW said, because it allows one party essentially to liquify real estate assets, while giving the other party the opportunity to create for itself a long position in real estate, all within a set time frame.

AEW said the transaction calls for Morgan Stanley to receive payments from the pension fund based on the performance of the selected real estate indices in exchange for Morgan's agreement to pay the fund a London Interbank Offered Rate (LIBOR) - based return. To make its payments, the fund intends to employ returns from a set of its assets that have been carefully chosen to match the characteristics of those included in the selected real estate indices, AEW said.