REAL ESTATE - The $9.54bn (euro) Los Angeles City Employees’ Retirement System has changed its targeted real estate allocation.
It had a targeted real estate allocation of 7% but has decided to move this allocation to a funding target of 3% and then increase this by 1% each year until it gets to the 7% level. So for fiscal 2007, the targeted allocation is 4%.
Investment officer Wayne Ige said: “We and our general consultant Pension Consulting Alliance felt it made no sense to have a 7% targeted allocation. It would have been very difficult to invest all of the capital. We will be able to manage the new allocation much better on an annual basis.”
This doesn’t mean that the pension fund can’t go above 4% for this year if it sees some good investment opportunities in real estate.
Ige said: “We still have a targeted range for real estate of 3% to 10%. This means we could go above 4% for real estate if there are some investment strategies that we like.”
There is a good chance that this might happen for the fiscal year of 2007. The fund has now actually invested 4% of its total assets in real estate.
This became a reality when it invested $85m into three commingled funds at its board meeting in June. It approved a $25m investment CPI Capital Partners Europe, $30m to Stockbridge Real Estate Fund II and $30m into the California Smart Growth Fund IV.
This doesn’t mean that the pension fund is done investing in real estate for fiscal 2007. Ige said, “We are going to be looking at some commingled funds for our board meeting in August.”
Los Angeles City will only be investing in real estate by placing capital in commingled funds. It will be doing this with the assistance of its real estate consultant, The Townsend Group.