Los Angeles Water and Power Employees’ Retirement Plan (WPERP) will need to commit $180m (€146m) to new real estate strategies this year – and the same amount in 2019 – to reach its 8% allocation target, according to its consultant.
In a presentation document by Courtland Partners, the $13.3bn pension fund has been advised to invest $60-90m in core, $60-90m in value-added and up to $90m in opportunistic strategies this year. A similar amount has been earmarked for 2019.
Courtland said this would be needed to meet its allocation target. The pension fund’s real estate portfolio was valued at $836m at the end of September 2017, representing 6.3% of total assets.
WPERP was also advised to focus on income-oriented returns, evaluate “defensive opportunities across the capital stack”, “slightly overweigh [the] non-core component of the portfolio”, and evalute European and Asian core opportunities.
The pension fund has a long-term objective to have 70% of its real estate portfolio in the form core investments, with value-added and opportunistic representing 20% and 10%, respectively.
Two real estate commitments were approved in the second half of last year: a $60m commitment to LaSalle Asia Opportunity V and $60m to Torchlight Debt Opportunity Fund IV.