REAL ESTATE – The Sacramento County Employees Retirement System has decided to invest all of its separate account capital into office buildings.
The main reason for this is portfolio diversification. The fund’s chief investment officer Jeff States said: “For both separate accounts we already have the right balance for the other three property types of industrial, retail and apartments. It makes sense for us to place the capital into office buildings.”
This became a necessity recently for one of the pension fund’s separate account. Sacramento County late last month sold the 163,796 square-foot Tysons International office building in Vienna, Virginia. The manager on this asset was BlackRock Realty.
The pension fund sold the property in one of the more popular office markets in the country. States said, “We felt this sale happened because we knew it was time to move the asset out of the portfolio and replace it with something else. Our goal now is to find a similar kind of office building in the Washington, D.C. region to purchase.”
Sacramento County had first purchased the property in 1997 for $31mn. It was sold for a gross sales price of $43.05m.
The pension fund has around $50m of investment capital to work on the account with BlackRock. This includes a combination of the sales proceeds from Tysons International and leverage.
Sacramento County has a separate account relationship with Cornerstone Real Estate Advisers. The pension fund sees that it also has around $50m of capital available to find a home for.
Office buildings are really what is lacking for this account. This could really be anywhere in the country. States said, “The amount of industrial, retail and apartments are fine. We really need to round out the portfolio with some office buildings.”