UNITED STATES – Los Angeles Fire and Police Pensions has replaced one fund manager and retained another as it moves to globalise its real estate investment trust (REIT) portfolio.

The pension fund has retained Principal Real Estate Investors, hired EII Capital Management and dropped incumbent manager Morgan Stanley Investment Management.

At the end of 2012, LA Fire & Police Pensions' had a $265m (€196m) US-only REIT portfolio. In April 2013, it decided to embark on a manager search with its real estate consultant RV Kuhns & Associates for a global REIT strategy.

The pension fund has seen the value of its REIT portfolio drop this year from $265m at the end of 2012 to $250m.

A new manager search was conducted because the incumbent managers had underperformed the median of the peer group over multiple time periods. The pension fund believes that active REIT managers should be able to provide consistent superior performance relative to the peer group.

The benchmark used for the portfolio was the Dow Jones US Select Real Estate Securities Index. The pension fund has yet to decide on a benchmark for its global strategy.

EII Capital Management will manage $150m of the portfolio and Principal will manage $100m.

AEW Capital Management and CBRE Clarion Securities were also considered for the mandate.