REAL ESTATE - San Bernardino County Employees’ Retirement Association has made commitments to real estate commingled funds totaling $40m (€29.4m).
One of these commitments was a $20m allocation to Beacon Capital Strategic Partners V. The pension fund is familiar investing in commingled funds managed by Beacon Capital Partners. Don Pierce is the Investment Officer for San Bernardino County. He said, "We have confidence in this manager through our previous experience with them. We invested capital in Strategic Partners II, III and IV."
Beacon Capital is still raising capital for Strategic Partners V. The total equity raise will be in the neighborhood of $3.5bn. San Bernardino County joins several other pension funds who have committed capital to the new fund. This includes California State Teachers Retirement System and School Employees Retirement System of Ohio.
Strategic Partners V only invests in office buildings. Beacon Capital looks for properties in areas with the same characteristics. These would include knowledge-based economies, have physical limits to new supply, are urban markets with greater liquidity, are considered to be a 24-7 city and have strong long-term demand fundamentals.
The commingled fund for the most part looks deals in the United States. Up to 20% of the deals for the fund can be properties in international markets. A couple of markets being looked at are London and Paris.
San Bernardino County made a $20m commitment to the Prudential Property Investment Separate Account II (PRISA II). This is a commingled fund managed by Pramerica Real Estate Investors. The pension fund in its own portfolio considers this commingled fund as a core investment fund. This is very different as to how most pension funds look at PRISA II. It’s really considered an enhanced return fund.
Pierce said, "For our portfolio, we think that PRISA II has more attributes of a core investment style. This is because there only is 25% leverage on the fund and in many cases it’s a stable portfolio. We do recognize that some of the assets in the portfolio are taking leasing risk."
San Bernardino County made these investment decisions as its board meeting on April 5th. It was assisted in these actions by its real estate consultant, The Townsend Group.
There was a couple of other real estate items on the agenda but there were pushed off to a future meeting. One was to approve the sale of properties that are in a separate account managed by American Realty Advisors and direct a portion of the proceeds into to the American Stable Value Fund that is run by the same manager. The other was to agree to sell its interest in three commingled funds that the pension fund had previously invested in.
