REAL ESTATE – The Los Angeles City Employees’ Retirement System has approved a new emerging manager policy for its real estate investment plan.
The pension fund made this decision in conjunction with its real estate consultant Townsend Group. The person working on the account for the consultant is principal Micolyn Yalonis. She said, "It’s our opinion that this will allow the pension fund to look at a wider range of mangers when considering a new real estate investment."
The consultant has done this with several of its other pension fund clients, including the Los Angeles Fire & Police Pension System.
Los Angeles City has several criteria established to define an emerging manager. One is that these managers must have no less than 2mft2 of assets under management. The firm should currently manage at least $100m (€76.5m) in its selected investment strategy. The capital to be allocated may not exceed 35% of the firm’s total assets under management after the allocation and no more than 20% of capital raised for a specific commingled vehicle.
The pension fund will not be awarding a specific allocation to emerging managers. It will allow the institutional investor to potentially choose from a wider range of commingled fund managers.
One of the reasons that this is happening industry wide is that pension funds are becoming more open to niche or specialised investment strategies. Real estate managers with these strategies have been challenged in establishing track records and raising capital. At the same time, they have often done a better job in accessing investment opportunities and producing solid investment returns.
The emerging manager policy could be one of the last changes that Townsend makes to the real estate strategy for Los Angeles City. The pension fund will have a board meeting on March 27. One of the agenda item’s that will be discussed and voted on is to replace Townsend as its real estate consultant with Courtland Partners.
The pension fund will also be looking at committing some new capital to some real estate commingled funds. These would include CB Richard Ellis Strategic Partners UK III, Colony Investors VIII and City View Urban Land Fund I.