LA Fire & Police considers in-house management of real estate investments

Los Angeles Fire & Police Pensions (LAFPP) is considering setting up a direct real estate investment strategy that would be managed in-house.

According to a board meeting report, the board of LAFPP asked staff and its real estate consultant The Townsend Group to explore the “feasibility of an internally managed real estate porfolio”.

Very few public pension plans in the US manage real estate investments internally, with the vast majority investing via third-party fund managers.

State Teachers Retirement System of Ohio is one of the exceptions, and Massachusetts Pension Reserves Investment Management Board has also set up its own in-house real estate programme, which it expanded last year.

According to the board meeting report, less than 5% of The Townsend Group’s clients utilise internal management to oversee real estate investments.

LAFPP noted that research by the Pension Real Estate Association shows that around 40% of pension funds globally make the direct investments.

If the $23.3bn (€20.5bn) pension fund was to establish a direct real estate strategy, it would restrict it to US markets and it would only comprise a portion of its $2.12bn real estate portfolio.

LAFPP also revealed it had invested in two real estate funds, committing $35m to the open-ended Kayne Anderson Core Fund, which focuses on medical offices, senior housing, student housing and self-storage, and another $35m to the retail-focused Asana Partners Fund II, which is seeking to raise $800m.

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