UNITED STATES - Sacramento County Employees Retirement System is expected to discuss two additional real estate investment strategies at its board meeting in October which could see the fund invest a further $125m (€90.6m).

Jeff States, chief investment officer for the pension fund, said it considering placing $75m in value-added commingled funds alongside $50m in another €50m with a global REITs manager.

"We have already established a solid core section within our real estate portfolio so it makes sense for us to place this capital into other areas from a diversification standpoint," said States.

Sacramento County has already invested in core assets through commingled funds and separate accounts with BlackRock Realty and Cornerstone Real Estate Advisers.

Mercer Investment Consulting is assisting the fund achieve its value-added strategy through two or three different commingled funds invested in the four main property types - office, industrial, retail and apartments are likely targets.

Mid-teens leveraged IRR is the kind of return that Sacramento County is seeking for the value-added strategy, assuming a three- to seven-year holding period.

However, it has been almost two years since Sacramento County last invested in global REITs. At the end of 2005, it allocated $50m each to Principal Global Investors and Urdang Securities Management for a global REIT strategy.

This time, the pension fund is seeking returns from global REITs in the range of 9%-10% but once the $125m is placed in the marketplace, Sacramento County is unlikely to make any additional commitments to real estate for a while.

The pension fund now has invested 12% of its total assets in real estate so the planned new commitments will take it very close to its targeted allocation of 15%.

Sacramento County completed a new asset allocation study over the summer and chose not to increase its exposure to real estate.