Los Angeles Fire and Police Pensions is considering shifting from global real estate investment trusts (REITs) to private real estate to capitalise on opportunities and diversification benefits, according to a board meeting document.
The pension fund’s investment consultant RVK disclosed in the meeting document that the plan is to reduce the overall REITs holdings from 30% to 15% of its total real estate portfolio while increasing private real estate from 70% to 85%.
The pension fund will retain its domestic REIT portfolio.
RVK argues that private real estate offers a better opportunity set, lower correlation to equities and aligns with the recommended structure for a smaller mandate size.
LA Fire and Police’s global REITs was valued at $414.4m as of the end of March 2024. Alliance Bernstein and Principal Real Estate Investors oversee global REIT assets valued at $217.2m and $196.8m, respectively, for the pension fund.
The pension fund’s domestic REIT portfolio is invested with Cohen & Steers and Principal Real Estate Investors, which manage portfolios valued at $443.9m and $381m, respectively.
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