OCERS rebalances core portfolio with Kayne Anderson and Clarion funds

Orange County Employees’ Retirement System (OCERS) is investing in two open-ended property funds managed by Clarion Partners and Kayne Anderson to help rebalance its core real estate portfolio.

The $15.9bn (€14bn) pension fund said in a board meeting document that it is committing $75m to both Kayne Anderson Core Fund and Clarion Lion Industrial Trust, following its decision to redeem its $166m investment in an ASB Real Estate Investments fund.

IPE Real Assets reported in June last year that OCERS placed the ASB Allegiance Real Estate Fund on its watch list for underperformance.

The pension said it planned to rebalance the portfolio further in the first half of 2019, as it seeks to optimise weightings, increase diversification and avoid “manager proliferation”.

The $1.2bn Kayne Anderson Core Fund, which opened in August 2017, is seeking reach a gross asset value of $2bn in two years.

It focuses on medical offices, senior housing, student housing and self-storage, and is targeting an annualised gross internal rate of return (IRR) of 9-10% with a current income return of 6-7%.

The $12.3bn Lion Industrial Trust targets mostly bulk distribution and warehouse assets and is seeking leveraged IRR of 11-13% with an annual income component of 4-5% over a full market cycle.

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