UNITED STATES - The City of Lakeland (Florida) Employees' Pension and Retirement System is planning to invest in real estate for the first time.
The pension fund has hired TA Associates Realty following a value-added commingled fund real estate manager search, and committed $10m (€6.7m) to its TA Realty IX commingled fund.
Pension fund officials have opted to invest in real estate at this time to give the fund additional diversification along with the prospect of higher returns towards its overall investment portfolio.
Lakeland Employees Pension is a relatively small fund compared with some of its local government peers and had total plan assets of $397m by the end of September 2009. Much of its investments are held in a combination of domestic and international equities. But the real estate move is expected to deliver returns as the projected net IRRs on the Fund IX are 16-17%.
TA Associates is still raising capital for Fund IX and is understood to have set a fundraising target of $1.75bn, so it can continue to buy small to medium-sized assets worth between $20m and $50m each across the office, industrial, apartments and retail sectors.
The intention is to buy 75% of the assets in the portfolio in suburban market locations along the East and West Coasts, while the remaining properties will be purchased in the Midwest.
Other investors in the commingled fund include a $100m commitment from New Jersey Division of Investment, $30m from Fresno County Employees Retirement Association and $15m from Los Angeles City Employees Retirement System.