REAL ESTATE- The Los Angeles Fire & Police Pension System has selected Adelante Capital Management and Morgan Stanley Investment Management as its first two managers for its first ever REIT investment program.
Both of these managers were awarded an allocation of $70m each. The two companies will be given full investment discretion with this capital.
The scheme made took this action with the assistance of its real estate consultant, The Townsend Group. Working on this account for the consultant was principal Micolyn Yalonis and consultant Matt Johnson.
Yalonis said, “We think that out client created this investment program because of its interest in REITs and the funding capability. Like many managers around the country, LA Fire & Police has had some difficulty investing in real estate on a direct basis.”
The first two managers will both be employing a long strategy with the capital that was awarded to them. Yalonis said: “We will have more of a comfort level with this strategy, given it’s the pension fund’s first activity in the REIT arena.”
There will be one other manager selected for the REIT program. The two other managers considered for this account are Advantus Capital Management and Principal Global Investors.
These two managers had tied with the same number of points in the REIT manager search. There were only six LA Fire & Police board members at the meeting where this was discussed. The voting was 3-3. The final decision will be made at the next board meeting on April 6.
The amount allocated to the final manager will be $70m. This would full fill the pension fund’s REIT allocation. It has targeted that 15% of its real estate portfolio will be a REIT investment strategy.
The rest of this asset class is broken down with a combination of stable investments and non-core investment strategy.