Los Angeles Fire and Police Pensions (LAFPP) is exiting two public real estate investment trust (REIT) portfolios managed by Principal Real Estate Investors, with plans to redeploy the total capital of over $527m into private real estate commitments.
The pension fund, which had been considering a shift away from global REITs, disclosed in a board meeting document that it did not renew its contract for the Principal Real Estate Investors Global REIT strategy, and the assets were subsequently sold earlier this month.
The proceeds of approximately $221m €190.6m) in proceeds were transferred to a cash account for future private real estate commitments.
According to the pension fund, the REIT portfolio failed to meet its benchmark in any time period over the last five years.
The second account set to be impacted is the Principal Real Estate Investor US REIT relationship, valued at $306.2m.
LAFPP approved a one-year contract extension last month, but the account will be fully liquidated within that new period to support recent and future private real estate commitments.
The account underperformed across the quarter-to-date, three-year and five-year time periods.
Principal Real Estate did not respond to a request for comment.
LAFPP still maintains a $478.5m portfolio managed by Cohen & Steers US REIT and a $180.8m portfolio managed by Alliance REIT.
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