Orange County Employees Retirement System (OCERS) is planning to issue $400m (€338.8m) worth of redemptions from its core open-ended real estate fund managers as part of an ongoing asset allocation overhaul which includes reducing its real estate portfolio.
As previously reported, OCERS has identified core real estate as the quickest way to reduce the pension fund’s real assets exposure. Capital redeemed from real estate funds would be reinvested in private equity strategies.
The move would see OCERS target real estate allocation reduced from 9% to 7%.
The pension fund’s holdings in open-ended core real estate funds include $318m invested in the Prime Property Fund, $262m in the AEW Core Property Trust, $79m in the Lion Industrial Trust and $76m in the Kayne Anderson Core Fund.
In a meeting document, OCERS said as well redeeming from its core open-ended funds during the fiscal 2021 year beginning in July, it also plans to approve up to two $75m real estate commitments to possibly target non-core blind-pool funds.
The pension fund’s real estate consultant The Townsend Group said in the meeting document that blind-pool funds will “mitigate near-term valuation risks, while pre-seeded funds may experience early write-downs”.
Another part of the pension fund’s new investment plan is to increase its non-US real estate portfolio limit from 5% to 10% to give OCERS a greater opportunity and flexibility to target potentially distressed strategies.
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