The Los Angeles County Employees Retirement Association (LACERA) has converted a fund to a fund-of-one structure due to capital-raising results by the manager, according to a pension fund document.

LACERA made a $100m (€94.4m) commitment to CityView Southern California (CSVC) Fund II in 2013. 

The fund structure would have been kept had CityView been able to raise at least another $50m from other investors.

The manager was unable to do so, resulting in the fund’s being converted.

The pension fund said the new structure would provide LACERA with greater control and an option to purchase a 100% interest in high-quality assets in the fund once they were stabilised, without going through a competitive bid process.

The number of assets in the fund, however, will be smaller, LACERA wrote in a board meeting document, with four or five properties instead of 8-10.

CVSC II has committed to three properties, accounting for around 65% of the fund.

The fund will develop and/or acquire opportunistic urban residential and mixed-use assets in Los Angeles, Orange County and San Diego.

Investments will deliver housing affordable to households earning 50-200% of median household income.

Los Angeles is considered to be second least affordable metropolitan area in the US, with Orange County third and San Diego eighth, according to the National Association of Home Builders at the time of LACERA’s initial commitment to the fund.

CVSC II is targeting a 14-16% net IRR.

CityView has committed $2m to the fund.

Project sizes are expected to range from 100 to 500 units and require $10m-35m of equity.

Construction loans will be taken at 70% loan-to-cost.