GLOBAL - The Los Angeles County Employees Retirement Association has approved a Request for Information (RFI) for managers interested in participating in a search for real estate debt strategies.
John McClelland, senior investment officer for real estate at the pension fund, said the amount of the allocation would remain subject to determination by LACERA at a future date.
But discussions to date have suggested a total of as much as $400m (€310.5m) may be allocated to one or more managers.
LACERA is hoping to use a separate-account structure, which provides more control over the investment process, in its debt investment strategy.
Responses to the RFI are due by 12 October, and a final decision is likely to be made in early 2011.
Both managers must have at least five years of verifiable investment experience in commercial real estate debt investments from sourcing new loan originations.
And both must be able to manage investments in a separate account relationship.
The pension fund said there was strong demand in the market for real estate debt by capital sources trying to buy core assets.
LACERA will have an investment strategy focusing on providing new debt backed by existing core assets - limited to office, industrial, retail and apartments and likely to be invested only in the US.
The pension fund is looking to achieve at least an 8% net internal rate of return on its debt investments.
Some of its capital will be placed in subordinated debt transactions.
Meanwhile, at its last board meeting on 8 September, LACERA said the value of the assets in its home building investment programme was $303m as at 31 March 31.
The programme is structured as an LLC, 99% owned by the pension fund and 1% by TriPacific Capital Advisors.
The net of fee return on the portfolio was 48.2% for the current quarter. It has lost 39.3% over the last year and 55.9% over the last three years.
The programme has $65m of equity capital left to invest on future deals.
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