SDCERS chooses Principal and Clarion funds as it rebalances core portfolio
San Diego City Employees’ Retirement System (SDCERS) has chosen the Principal US Property Account real estate fund for what could be its largest-ever commitment to a core US real estate fund.
IPE Real Assets reported in September, that SDCERS planned to invest up to $101m (€89.1m) with a “high conviction manager” as it sought to rebalance its core portfolio.
A board meeting report shows that SDCERS plans to approve the $101m commitment to the $7.94bn Principal US Property Acount alongside a $30m investment in the $7.7bn Clarion Lion Industrial Trust.
The commitment is being funded by proceeds from the liquidation of a separate account managed by DWS and new capital from the $8.1bn pension fund.
Last year, IPE Real Assets reported that SDCERS has been gradually winding down a US property portfolio held in the separate account after making a decision the year before to the sell the assets and reinvest in core open-ended funds.
The decision taken is intended to provide benchmark-like exposure to the US commercial real estate market with the opportunity to outperform the NFI-ODCE index.
SDCERS is also seeking to offset its overweight position to the office sector, by increasing its industrial exposure.
Principal US Property Account’s industrial exposure is 20%, above the 15% in the NFI-ODCE Index, while Lion Industrial Trust invests exclusively in the industrial sector.