Los Angeles Fire and Police Pension System and Massachusetts Pension Reserves Investment Management Board have both decided to fire EII Capital Management as their global REIT manager.
Mass PRIM will now conduct a full review of its REIT portfolio, according to Tim Schlitzer, CIO for real estate at the pension fund.
LA Fire & Police gave EII Capital a $150m (€118m) global REIT portfolio in November last year, according to board meeting documents. The portfolio was worth around $165m by June this year.
Raymond Ciranna, general manager for LA Fire and Police, said the departure of four personnel from EII Capital’s non-US portion of the team impaired the firm’s ability to manage the global REIT portfolio for the pension board.
RVK, general investment consultant for LA Fire and Police, said it concurred with the pension fund’s decision – as did the fund’s real estate consultant, The Townsend Group.
LA Fire and Police will now index a portion of the portfolio and allocate the rest to Principal Real Estate Investors. RVK has been asked to conduct a new global REIT manager search.
Part of the portfolio will be placed into index funds managed by Northern Trust, Alliance Capital and BlackRock. Around one-third of the portfolio will be awarded to Principal alongside two or three index managers. No decision has been made on what index will be used on the portfolio.
Principal, hired at the same time as EII, was allocated a $110m global REIT account and also oversees a domestic REIT portfolio valued at around $288m.
Mass PRIM first mandated EII Capital for a domestic REIT programme in 2008. The mandate, worth around $510m, was converted to a global REIT strategy in 2012.
The account will for now be transferred to Invesco Real Estate, one of the pension fund’s existing global REIT managers, according to Schlitzer.
Mass Prim’s review of the entire REIT portfolio will run until January next year, when a final decision will be made by the plan’s board.
The fund is looking to invest further in private real estate, including a potential commitment to The Carlyle Group’s Realty Partners Fund VII, to which it made a $47.5m commitment in late-2011.
Mass PRIM is also planning additional separate account core acquisitions between now and year-end, worth as much as $300m. Invesco, LaSalle Investment Management, AEW Capital Management, JP Morgan Investment Management and TA Associates all manage separate accounts for Mass PRIM.
- Alliance Capital
- American Investors
- EII Capital Management
- Invesco Real Estate
- Investment Vehicles
- Listed Markets & REITs
- Los Angeles Fire & Police
- Massachusetts Pension Reserves Investment Management Board
- Northern Trust
- Pension Funds
- Principal Real Estate Investors
- Separate accounts
- US Investors