UNITED STATES – Los Angeles County Employees Retirement Association (LACERA) has selected Heitman, Clarion Partners and Stockbridge Capital Group as new separate account managers for US real estate investments.
Each manager will manage $200m on a discretionary basis within investment guidelines set by LACERA.
Heitman will focus on mostly low-risk, stable income-producing properties with 70-80% of the portfolio weighted towards core assets; the balance will be in value-added investments.
Heitman will invest in the four main property sectors of office, industrial, retail and apartments. It also will consider medical offices and self-storage.
Clarion Partners will acquire a mixture of core (65-70%) and value-added (25-30%) properties across the main property sectors, but may also consider investing in student housing. The leverage component will be 50% core and 65% value-add.
Stockbridge will also invest across the four major sectors but will consider all risk-return profiles for LACERA, including core, value-added and high return.
The breakdown is expected to be 50% core with remainder split equally between value-added and opportunistic.
The leverage amounts will be 50% core, 65% value-add and 80% high return. The property type breakdown is 30% for office and industrial, 25% apartments and 15% retail.
The pension fund had first issued the RFP for the search in January with the assistance of The Townsend Group.
There were a total of 18 responses with six finalists. The other finalists not receiving an allocation were AEW Capital Management, JP Morgan Asset Management and LaSalle Investment Management.
The San Francisco Employees’ Retirement System (SFERS) has delayed the establishment of a new real estate investment plan until after the completion of a review by its managing director of private markets, Art Wang.
The pension fund normally sets its real estate investment plan in May for the 12-month period from July 1, but has decided to extend its current plan until after the review, which could have implications for real estate.
In the meantime, SFERS has allocated $300m for real estate investments because it does not want stop investing.
At the same time, SFERS doesn’t want to stop investing capital and real estate that is why it extended the current investment plan by an additional nine months.
The pension fund has also approved a new $40m commitment to the Berkshire Multifamily Value Plus Fund III, a $400m fund managed by Berkshire Property Advisors.
The fund can acquire debt, make direct acquisitions and asset recapitalizations, and fund developments.
Fund III will be targeting an 11-13% total return and Berkshire have committed to a $10m co-investment.