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.
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