UNITED STATES - Orange County Employees Retirement System is adopting a real estate investment strategy which will see it only invest in commingled funds.

Pension fund officials believe investment in commingled funds provides greater diversification and liquidity when compared to separately managed accounts, along with stronger access to the primary real estate markets.

Orange County Employees made a decision at its board meeting on January 22, assisted by its consultant, Callan Associates, to shift strategies so its first move will be to start a search to invest $46m (€31.2m) into two core commingled funds - the amount of capital it has left before the pension fund reaches its 10% targeted real estate allocation.

No decision has been made as to when firms would be hired for this search but there is a possibility Callan will issue a Request for Information on the search from interested real estate managers.

A change with wider-ranging implications, however, is the pension fund will be selling all of its separate account real estate assets over the next five years - the proceeds of which would then be reinvested into commingled funds.

Orange Country's separate account properties were valued at $524m to of the end of 2007, under the management of CB Richard Ellis Investors and American Realty Advisors.

Its assets are currently a mixture of office buildings, industrial properties, shopping centers and apartments in Washington State, California, Texas, Tennessee, Minnesota, Illinois, Pennsylvania, Virginia, Florida and Georgia.

CB Richard Ellis still has $8m it could have used for new acquisitions but that will now be returned to the pension fund as part of future capital to be invested in commingled funds.

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