LA City Employees commits $140m to core property funds

The Los Angeles City Employees’ Retirement System (LACERS) has approved $140m (€106.6m) of commitments into four core open-ended real estate funds.

The four $35m commitments were made to Clarion Partners’ Lion Industrial Trust, Jamestown Premier Property Fund, Morgan Stanley Prime Property Fund and Principal US Property Account.

The commitments, part of $230m of planned investment in real estate over the next few years, were approved by LACERS as part of its annual investment plan, ratified in May. The remaining capital is planned for non-core funds.

Due to the funds’ entry queues, capital will be called between January and September next year.

The Townsend Group, LACERS’s real estate consultant, said Clarion Partners was selected for its favourable view of the industrial sector. Lion Industrial Trust has a gross asset value of $4.8bn.

Townsend said industrial properties offered an attractive current income, relatively low volatility, lower operational risks and expenses and an attractive supply-and-demand outlook.

Townsend retail investment was a main factor when selecting the Jamestown and Morgan Stanley funds. The latter owns high-street retail in New York’s SoHo and LA’s Beverly Hills. The consultant said Jamestown was chosen to help increase LACERS’s weighting in the sector.

Jamestown last year paid around $54m for San Francisco’s Ghiradelli Square.

The US Property Account, which has a gross asset value of $6.2bn, was chosen for its diversification. The fund is overweight on offices, industrial and low-level apartments.