Los Angeles County Employees Retirement Association (LACERA) has dropped Invesco Real Estate as one of its separate-account managers, as it reconfigures its real estate portfolio.

According to a board meeting document, the $506m (€418m) portfolio managed by Invesco will be transferred to Clarion Partners, another separate-account manager.

LACERA said the move was made due to underperformance by Invesco as well as a desire to consolidate and reduce its separate accounts in favour of open-ended core funds. 

An Invesco spokesperson told IPE Real Assets: “We had a wonderful 25-plus year relationship with LACERA. Over the past 17 years, our business and the industry has evolved from a focus solely on separate accounts to a balance between separate accounts and funds.

“We embrace and support LACERA’s evolution towards funds and look forward to continuing our relationship through our commingled funds.”

The board meeting document shows that Invesco underperformed the ODCE core US property fund benchmark over, three, five and 10-year periods, although it outperformed by 0.05% since inception.

The underperformance was attributed primarily to two large retail investments in New York and Pennsylvania, which have a combined value of $149m.

The portfolio also includes two industrial assets in Southern California worth a combined $150m, office buildings in Houston and Dallas worth $142.5m, and an apartment complex in Denver valued at $64.5m.

LACERA also said a different manager could bring a fresh perspective to managing assets, including the two retail properties.

Heitman and Stockbridge, two of LACERA’s separate-account managers, were considered alongside Clarion Partners to take over the portfolio.

DWS was ruled out due to concentration risk. The company already manages a $1.9bn of assets for the pension fund, representing 35% of its real estate portfolio.

To read the digital edition of the latest IPE Real Assets magazine click here. 

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