NORTH AMERICA – The Los Angeles City Employees’ Retirement System is planning a new search for REIT managers to invest in real estate securities in either the US or on a global basis.
The amount of capital allocated for this mandate is approximately $65m (€48m).
The pension fund stated in a board-meeting document that the funding for this search would be derived principally from a reduction in exposure to domestic equity and/or fixed income managers.
The strategy for the capital will be a long-only investment plan for real estate securities.
The plan calls for one of two indexes to be used by the selected manager or managers – either the FTSE NAREIT All Equity Index if the programme is in the US or the FTSE EPRA/NAREIT Developed Index if the strategy invests in global REITs.
The return objective is to outperform the benchmark by 100 basis points net of fees annualised over a full market cycle.
This is typically a period of 3-5 years.
Los Angeles City will conduct the search along with its general investment consultant, Wilshire Associates.
They have established several minimum qualifications for potential managers.
One condition is that the firm must have a minimum of $50m under management of the proposed product as of the end of 2013.
The pension fund wrote in a board-meeting document that its investment staff would request that Wilshire screen its database and provide a list of potential candidates.
Wilshire’s database currently contains approximately 130 investment managers that run REIT strategies.
Based on a pre-screening of this universe, 12 managers are expected to meet the minimum qualifications.
Completion of the entire process is anticipated to occur by the third quarter of this year.