​SDCERS targets core infrastructure allocation with Brookfield and KKR funds

San Diego City Employees Retirement System (SDCERS) is seeking to achieve its new 1% target allocation to core infrastructure with $120m (€108m) in commitments to funds managed by Brookfield and KKR, according to the pension fund’s board meeting documents.

Last year, IPE Real Assets reported that SDCERS planned to increase its target allocation to infrastructure from 3% to 4%, and earlier this year the $12bn pension fund decided to focus the new allocation on core infrastructure.

The new commitments include a $60m investment in Brookfield Super-Core Infrastructure Partners, a $10.5bn global fund 38% invested in North America and 34% invested in Europe, with the balance in Asia-Pacific.

The fund is targeting an internal rate of return of 8% with a projected cash yield between 5% and 6%.

SDCERS also invested in the KKR Diversified Core Infrastructure Fund. Half of this $9.5bn fund is invested in Europe, along with 29% in the US, 9% in developed markets in Asia, and 12% elsewhere.

KKR is targeting net returns for the fund of between 7% and 9% with a 5% cash yield.

SDCERS has also added to its real estate portfolio with two new commitments totaling $75m.

This includes a new $50m commitment to the CBRE US Core Partners fund, a core open-ended fund with a net asset value of $7.7bn through the first quarter of 2024. During the same time period, the fund had a redemption queue of $830m and an entry queue of $12.5bn.

The fund is mostly made up of industrial and apartment assets, but it also has exposure to office, retail and alternative sectors, including self-storage and healthcare.

The other real estate commitment was a $25m investment in the Sabal Debt Opportunities Fund III, which primarily acquires debt secured by operating multifamily assets in the US.

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