Marin County Employees’ Retirement Association will be selling its separate account property assets and re-investing the sale proceeds into commingled funds.
Jeff Wickman, retirement administrator for the pension fund, cited current market pricing and greater diversification as the main reasons behind the move.
“All of these properties are located in Northern California which many investors believe is a very attractive market to be investing in,” he said.
“We also think that we can achieve more diversification by reinvesting the capital into commingled funds.”
Marin County Employees’ plans to re-invest the $100m (€74.7m) expected to be generated by the sales into two core open-ended real estate funds.
It is expected that AEW Core Property Trust and UBS Trumbull Property Fund will each receive a $50m commitment.
“We felt that it would be best to invest more capital with the current managers and adding a third manager might not lead to much more diversification as many of the core open-ended managers invest in the same kinds of properties,” said Wickman.
The six properties the pension fund will be selling are valued at around $129m. They are a mixture of apartment, office and R&D properties located in the East Bay, the San Francisco Peninsula and Silicon Valley.
Woodmont Real Estate Services will be responsible for deciding when all of the properties will be brought to the market for sale.
The first asset to be sold is the Century Plaza office building in Foster City, California. The pension fund has valued the property at $33m and it is likely to be placed on the market in September.
Marin County Employees’ has made two prior commitments to the core funds managed by AEW and UBS. The pension fund approved two allocations to the AEW fund in 2013 totaling $65m. The value of these investments was placed at $68.5m, at the end of June.
The pension fund started its relationship with UBS in 2011 with a $15m commitment. This was increased by $50m two years later.
Marin County values the investment at $16.7m. It is low because not all of the commitment from Marin County has been called by the manager. The $50m commitment had not been called at the end of June. It is expected to be called in October.
The new $50m commitment will be called by the manager over the next six to eight quarters.
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