UNITED STATES - Los Angeles City Employees' Retirement System has approved three new commingled fund investments totaling $50m (€31.5m), in a bid to diversify its non-core holding.
Assisted by real estate consultant, Courtland Partners, LAC has committed $25m to the Walton Street Real Estate Fund VI, which has a targeting capital raising of $2.5bn and will then be largely invested in major US cities, alongside limited investment in Europe, India and Mexico, to deliver projected return of 18% per annum.
Walton will be making a co-investment to the opportunity fund worth up to 5% of the fund's aggregate commitments but no more than $60m.
Its strategy is to capture market opportunities in distressed residential land/home builders, distressed debt as well as in traditional sectors of senior housing, office, hotels, and commercial development.
LAC also approved at its latest board meeting a $15m commitment to the US-only value-added $1.7bn Realty Associates Fund IX, managed by TA Associates Realty.
Assets will be used to buy properties at below replacement cost in a bid to generate strong current value, and will be achieved through intensive asset management, prudent use of leverage and repositioning to give investors 15% projected net IRR.
The remaining commingled fund in this round of funding was a $10m commitment to the $150m raising for the Mayfield Gentry Genesis Value Fund.
It has projected net returns of 11-15% and will invest in the four main property types of office, industrial, retail and apartments but will be targeted at ‘less than perfect' real estate below the radar screen of larger institutional funds.
These commitments fall in line with LAC's decision to commit only to non-core real estate in 2008 as the pension fund believes there are stronger investment possibilities available in opportunistic and value-added sectors.
In other investment news, State-Boston Retirement System is going to be placing $50m into commingled funds with a variety of investment strategies. These will include $10m each to core plus, value-add/opportunistic, sector focused, secondary and mezzanine debt/high yield.