UNITED STATES - Orange County Employees Retirement System and its consultant, Callan Associates, have determined that core and distressed debt opportunities will offer the most compelling investment possibilities in the near future real estate market.
The latest real estate strategy review means since the pension fund has already made commitments to two core commingled funds, officials will focus on distressed debt in the near-term.
There is still a lack of capital investing in debt, despite increased interest from US pension funds in recent months, so Orange County may try to follow the lead of others and tap US debt opportunities where assets are in trouble or are owned by companies which are themselves in financial difficulty.
The Orange County pension fund is planning to maintain its existing strategy and invest only in commingled funds, and it does have $78m (€52m) of capital left before it reaches its targeted real estate allocation of $672m.
It has already committed 25m to The Prime Property Fund which has already been accepted by Morgan Stanley Real Estate, alongside a further $100m allocation to AEW Capital Management's Core Property Trust although this capital has yet been drawn down.
Orange County is not the only investor to this fund as AEW has attracted a total of $1bn to its fund but has only called in approximately 35% of the capital.