San Diego City Employees Retirement System (SDCERS) is planning to move $100m (€90.2m) out of its core real estate debt investments into core-plus funds, because of the core investment’s underperformance.
The pension fund’s real estate consultant Meketa Investment disclosed in a meeting document that $50m each is being redeemed from Mesa West and MetLife Mortgage to be transferred into four core-plus funds by making $25m commitments to each fund in a bid to achieve higher returns.
SDCERS has an 81% exposure to core in its real estate portfolio and plans to lower it to 70% over time.
As previously reported, the pension has issued redemptions from UBS Trumbull Property Fund and MetLife Core Property Fund as part of its strategy to reduce its core real estate exposure.
The pension fund is also planning to issue redemptions of $33m per year for the next three years from its core debt portfolio.
In the current year, SDCERS intends to invest a total of $100m into non-core investment opportunities by making four $25m commitments.
The plan includes placing between $50m to $75m into sectors supported by favourable demand trends/or demographics like residential, logistics, healthcare, self-storage, data centres, hotels and neighbourhood/community retail.
Part of the non-core investment plan also involves placing between $25m to $50m into structured real estate debt.
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