Two more US pension funds are set to drop EII Capital Management following staff departures at the company.
San Francisco Employees’ Retirement System has decided to terminate its global REIT mandate with EII, and San Diego City Employees’ Retirement System is considering similar action.
The news comes a month after Los Angeles County Employees Retirement Association revealed it would be dropping the manager.
The decisions, according to board meeting documents for the three pension funds, are related to the departure of James Rehlaender, managing director and portfolio manager for global real estate securities, and Peter Nieuwland, senior analyst and co-portfolio manager for Europe.
Rehlaender’s and Nieuwland’s moves follow the decision by Schroders to bring the management of listed real estate funds – previously run by EII – in-house. Rehlaender was manager of three of the funds.
San Francisco Employees, advised by Angeles Investment Advisors, is terminating a $104m global REIT mandate managed by EII. San Diego City, advised by Hewitt EnnisKnupp, is looking to end a $76m account.
San Francisco Employees is also terminating a $98m global REIT account managed by CBRE Clarion due to poor performance.
According to board meeting documents, CBRE Clarion had not reached the target of 2% annualised outperformance before fees. The manager was trailing the benchmark over three and five-year periods; its performance since inception was slightly above the benchmark but still below expectations.
BlackRock, which manages a REIT index fund, stands to benefit from the decisions. San Diego City is moving the capital to the BlackRock Developed Real Estate Index Fund, which tracks the FTSE EPRA/NARET Developed Real Estate Index.
San Francisco Employees is planning to move the capital from both the EII and CBRE Clarion accounts to the BlackRock fund.
The pension fund capital might only reside in the BlackRock fund in the short term. San Diego City is considering hiring Brookfield Investment Management to take over its global REIT strategy.
According to Hewitt EnnisKnupp, Brookfield is one of only two managers out of 34 to outperform the consultant’s standard benchmark in each calendar year since 2009, when Brookfield launches its global alpha strategy.
San Francisco Employees will review how global real estate securities fit within its real assets portfolio in the long term. If the pension fund decides to retain a global REIT exposure and to seek an active manager, Angeles will assist in a search.
- American Investors
- Angeles Investment Advisors
- Asset Allocation
- Brookfield Investment Management
- CBRE Clarion
- EII Capital Management
- Fund Management
- Hewitt EnnisKnupp
- Investment Vehicles
- Listed Markets & REITs
- Open-ended funds
- Pension Funds
- San Diego City Employees’ Retirement System
- San Francisco Employees' Retirement System
- Separate accounts
- US Investors