Los Angeles Water and Power Employees’ Retirement Plan has voted to increase its targeted allocation to real estate from 8% to 10% following an asset allocation review.
The $15.6bn (€12.6bn) pension fund said in a meeting document that the new allocation will be funded by taking 1% each from public equity and fixed income portfolios.
At the end of the first half of the year, the net asset value of Los Angeles Water and Power’s real estate portfolio was $1.1bn, representing 7.3% of the pension fund’s total plan assets.
RVK, which conducted the review, said the allocation increase will give the pension plan the opportunity to invest in assets at attractive prices as the real estate market reconfigures. According to RVK assets like data centres, light industrial, medical office and last-mile distribution centres continue to see demand growth as a result of shifting consumer and business preferences.
The pension fund said in the meeting document that it has also put Heitman Real Estate Securities on its watch list due to organisational changes within the management firm. The ongoing changes include the manager dissolving its global investment committee.
Heitman manages a $30m real estate investment trust portfolio for the pension fund.
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