US - The Los Angeles Fire & Police Pension System has decided to invest $30m in the CIM urban REIT. It has also decided to extend the contract of Lowe Enterprises as a separate account real estate manager. Both decisions were taken at the pension fund’s recent board meeting.
The CIM urban REIT aims to buy existing and stabilized properties that are located near downtown/urban areas. The fund manager believes these properties will benefit from the positive affects of the growth and revitalization of many downtown areas around the US.
The CIM group is looking for a total capital raise in the neighborhood of $2bn. It’s projected that investors will achieve net IRRs in the 11% to 13% range assuming a 10-year holding period.
Los Angeles Fire & Police was advised by its real estate consultant the Townsend group. The consultant believes in the niche investment strategy employed by CIM. It thinks that with fewer players chasing these deals, there won’t be as much pricing pressure on the acquisitions of assets.
Los Angeles Fire & Police still has a ways to go before its reaches its 10% real estate allocation. The pension fund has invested only 5.5% of its $12.8 billion of total assets in the asset class.
But the pension fund has chosen to extend its contract with Lowe Enterprises for another three years. The previous contract was due to run out at the end of 2005.
The pension fund does not have a specific real estate allocation with Lowe. The relationship is set up on a deal-by-deal basis. When a deal is found, it’s brought back to the pension fund for final approval.
Lowe has been an active seller on the pension fund’s behalf in the past couple of years. The investment strategy is value-added. Lowe buys existing properties and looks to improve them by re-leasing, repositioning or redeveloping.