The introduction of the TREF by Dan Brea from Con and Steers was a focus of the meeting. The fund is designed to combine private and publicly traded real estate investments with a proposed allocation of 65% in private real estate and 35% in public real estate. This blend aims to improve liquidity and provide access to sectors not typically included in core real estate investments. The TREF is expected to allow for quicker market responses, addressing the slow liquidity of traditional private real estate. Brea emphasized the importance of real estate in maintaining returns during inflationary periods and noted the benefits of public real estate offering immediate market responses to positive news.

The board expressed interest in the TREF, particularly due to its anticipated performance and the strong market interest it has garnered. The fund offers a 20% discount on fees for Burgess Chambers clients, lasting throughout their partnership, with a standard fee set at 1.15%. A discussion followed regarding the commercial real estate market, which has seen varied recovery rates by property type. Brea noted optimism in sectors such as healthcare and urban office markets, which are beginning to recover and show potential rent growth.

In the broader economic context, Blake Mighton’s presentation highlighted that 2025 was a robust year for U.S. equities, marking the third consecutive year of double-digit growth, a rarity in historical terms. However, the board’s performance slightly lagged behind blended benchmarks due to underperformance in large-cap value products and insufficient exposure to high-performing AI-related stocks. Despite these challenges, the portfolio manager noted that recent adjustments in allocations were beginning to show positive results.

A shift in market dynamics was also evident, as Mighton noted a rotation away from speculative growth names toward value stocks and quality positions. This shift was underscored by the decreased contribution of top tech stocks, known as the Magnificent Seven, to the S&P 500’s performance. The discussion touched on the struggles faced by active managers in keeping pace with benchmarks, particularly in value sectors, due to their avoidance of high-risk biotech investments.

Looking ahead, the board discussed the need for cautious optimism, noting potential headwinds for consumer spending, a significant component of U.S. GDP growth. A projected 25% increase in the average tax refund for 2026 could boost economic activity, as these refunds are typically reinvested into the economy shortly after receipt.

Another discussion during the meeting was the annual true-up of pension contributions, which saw an increase from 12.1% of payroll to 14.62%. The adjustment reflects the city’s fiscal requirements and is influenced by a mandated mortality assumption change, higher-than-anticipated salary hikes, and investment returns falling below expected levels. The board noted that the funded status of the pension plan had declined to approximately 85%, attributed to recent salary increases and changes in mortality assumptions.

The meeting concluded with formalities, including the approval of the valuation report and the declaration of returns with the recommended assumption of 7.25%. An experience study update was also approved for the August meeting.