UNITED STATES - Los Angeles City Employees' Retirement System has approved two new real estate commitments totaling $45m (€33.1m) which will see the pension fund invest in REITS and Latin America.
The largest of these commitments was a $25m allocation to Quadrant Fund I - an open-ended commingled fund which has part of its strategy investing in publicly-traded real estate securities.
Los Angeles is aware of the current volatility in the REIT sector and which had negatively impacted Real Estate Advisors commingled fund's total return at the end of June to -15.3%.
Yet the pension fund believes this would be a good way to gain access to high quality real estate portfolios.
Los Angeles City joins several other investors in the commingled fund, including Fort Worth Employees Retirement Fund, Policemen's Annuity and Benefit Fund of Chicago, City of Oviedo (Florida) Police Officers Retirement Fund and the City of Delray Beach (Florida) Police and Firefighters, alongside a $5m co-investment from Quadrant Real Estate.
The fund has seen no defaults in its portfolio and the pension fund thinks it will see value from a market recovery cycle.
Fund I is looking to raise $500-800m and will have at least 60% of its investment in liquid securities as well as diversifying by property type and geography, in a bid to achieve gross IIR return of 25%.
Elsewhere, Los Angeles City also made a $20m allocation to Paladin Realty Latin America Investors III - the first dedicated pan-Latin America fund in the pension fund's portfolio.
Officials are looking to cash in on the growth in Latin America real estate but its primary focus will be in Mexico, Brazil and Chile.