San Diego City Employees to rebalance core real estate portfolio

San Diego City Employees’ Retirement System (SDCERS) is to rebalance its portfolio of core US real estate fund investments, according to a board meeting report.

The institutional investor is planning to redeem capital from two open-ended funds, increase its exposure to another and potentially make an oversized commitment with a new fund manager.

The commitment to a new “high conviction manager” would be up to $101m (€86.6m), making it potentially the largest made by the pension fund in the past several years.

The pension fund’s real estate adviser The Townsend Group said in the report that the large commitment would provide SDCERS with a significant fee break.

Townsend plans could potentially bring a prospective manager before the board of SDCERS before the end of the year.

Meanwhile, SCDERS will seek to redeem $47m from the UBS Trumbull Property Fund and $18m from the JP Morgan Strategic Property Fund, while maintaining its positions in Prudential PRISA, RREEF America REIT II and AEW Core Property Trust.

Townsend is also recommending a new $24m commitment to the Morgan Stanley Prime Property Fund, based on its positioning and projected performance. SDCERS already has an $80.5m investment in the fund.

The pension fund will also consider making $40m of commitments to non-core real estate funds.

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