UNITED STATES - Los Angeles County Employees Retirement Association has sold a shopping centre in Los Angeles and traded it for an investment into a commingled fund with the same real estate manager.
LACERA sold the Baldwin Hills Crenshaw Plaza Shopping Centre for $154m (€107m) to Capri Capital Advisors for its commingled fund, Capri Urban Investors, and then
Agreed to be a $150m investor in the same commingled fund.
John McClelland, principal investment officer for real estate for LACERA said: "We think this transaction is important for us on several fronts. We were concerned about owning too much real estate in the Southern California area. We also knew that the property was going to need some additional equity capital to improve it. It also allows us to still own an interest in the property. We also get some diversification benefits be being able to own shares of more properties by investing in the commingled fund," he added.
To offset any conflicts of interest, the pension fund hired RREEF as an independent fiduciary to work on the transaction.
One requirement on the deal was Capri Capital had to go out into the market and raise an additional $275m of capital from other investors for Capri Urban Investors and has done so by raising a $50m commitment from New Jersey Division of Investment and $30m from Los Angeles Fire and Police Pension System.
"We made this stipulation because we wanted our commitment to be no more than 30% of the capital for the commingled fund," said McClelland.
Investors in Capri Urban Investors are projected to achieve a net IRR of 15%.