Wurts president and chief executive Jeffrey MacLean wrote in a memo to the board: "As the availability of debt has fallen and the cost thereof has increased materially, Wurts & Associates has concerns regarding the ability of infrastructure to meet required return expectations."
added: "In addition, there has been a significant amount of undrawn capital raised recently for infrastructure which we believe will increase competition for assets and may place further downward pressure on expected returns, at least without incurring even further leverage."
There is currently over $90bn in infrastructure funds in the market seeking capital, MacLean
wrote in his
memo, citing data from Preqin.
also said the players in the industry are in flux as investment banks, which have been major participants in infrastructure projects, could restructure their business models to focus more on conventional commercial banking.
"A heightened level of scrutiny surrounds infrastructure units owned by large financial institutions," he
Last year, the pension fund approved a real asset allocation target of 11% of the total portfolio that included investments in real estate, Treasury Inflation-Protected Securities, infrastructure and commodities.
said an exposure to passive commodities will provide inflation protection through investments that are more liquid than infrastructure.