San Diego City Employees’ Retirement System (SDCERS) plans to allocate $240m (€221.8m) to real estate investments in fiscal year 2025, according to the pension fund’s board meeting document.
This marks a substantial increase compared to the single $25m commitment made in the fiscal 2024 year, which ended on 30 June and involved a commitment to the Torchlight Debt Fund VIII fund.
In fiscal 2025, SDCERS expects to allocate $40m to “high conviction core managers” and $75m to new diverse or residential-focused funds.
To maintain the target allocation within its core real estate portfolio, the $11.3bn pension fund said it intends to stop a $55m redemption request from the MetLife Core Property Fund.
SDCERS intends to redeem capital from the Mesa West and MetLife core mortgage funds and reinvest the capital into higher-yielding non-core debt investments.
The pension fund’s non-core real estate investment strategy for fiscal year 2025 involves allocating $70m, split equally between two non-core equity funds.
SDCERS has also earmarked an additional $55m for non-core debt investments. This strategy includes $25m allocated to a new manager and the remaining amount split into two commitments with existing managers.
The commitments to existing managers involve allocating $15m to the Torchlight VIII and committing $15m to the Waterton debt sidecar fund, which invests alongside the Waterton Residential Property Venture XV fund. SDCERS previously made a $25m commitment to Venture XV.
SDCERS intends to approve a sub-allocation for real estate debt within its overall real estate portfolio which represents 10% of the pension fund’s overall portfolio. This sub-allocation will target 10% of the real estate allocation, with a permissible range of 0% to 20%.
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