REAL ESTATE – The $11.1bn (€8.6bn) Los Angeles Water and Power Employees’ Retirement Plan has approved its first two investments in real estate.
These will be in two open-ended core commingled funds. It has made $50m commitments each to the Strategic Property Fund and Prudential Property Investment Separate Account (PRISA).
The scheme made the decisions at its board meeting on August 16. The other finalist being considered for this capital was The Prime Property Fund. This is a commingled fund managed by Morgan Stanley Real Estate.
The pension fund took this action with the assistance of its real estate consultant. This is Pension Consulting Alliance.
Los Angeles Water and Power thinks that the real estate commitments will add more diversity to its overall portfolio. Retirement Plan Manager Sangeeta Bhatia said, “We believe that these investments will provide overall diversification for our plan.”
The decision to move into real estate goes back to an asset allocation study that was conducted in 2002.
The pension fund has established an initial targeted real estate allocation of 4%. This will be invested in time in the future. Los Angeles Water and Power now has total assets of around $6 billion.
PRISA is a commingled fund managed by Pramerica Real Estate Investors. It has a total net asset value of $8.5bn as of the end of March.
The vast majority of its investments are to be with a core strategy. This is usually investing in established and leased office buildings, shopping centers, apartments and industrial properties. The commingled fund can have around 20% of the fund be in non-core investments.
The Strategic Property Fund is managed and operated by JP Morgan Asset Management.
This is a commingled fund that mostly invests in the four main property types of office, industrial, retail and apartments. It looks for assets that are spread out across the country.