REAL ESTATE – The San Bernardino County Employees Retirement Association took on several real estate items at its board meeting in early August.
The most significant of the actions was to change the overall mix of its real estate portfolio.
The pension fund approved that its overall investment plan will call for 45% core investments and 55% non-core investments. The previous split was 50/50.
San Bernardino County’s Chief Investment Officer Tim Barrett said, “We made this change for a couple of reasons. One is that we can achieve more diversity in our portfolio. This will be done by investing in separate accounts, commingled funds and limited partnerships. We also can produce higher returns by having more non-core assets in the portfolio. Our real estate investment plan has changed significantly from a couple of years ago when the portfolio was 100% core.”
The pension fund has an 8% targeted allocation for real estate. It has actually invested 9.5%. This is allowed as it has a range for real estate of an additional plus/minus 2%. It figures its action for real estate will be somewhat limited for the rest of the year.
The activity will happen when commingled funds and limited partnerships the pension fund invested in are selling the assets that they have acquired. The pension fund’s share of the proceeds from these sales could then be reinvested.
San Bernardino County did approve some new capital to a value-added investment. It will be investing an additional $7m of equity to the K-mart recapitalization project in San Mateo, Calif. This brings the amount that the pension fund has invested in this project to $32 million.
The pension fund made this investment through its separate account manager, American Realty Advisors. The site is being redeveloped into a mixed-use project. There could be some housing and retail as part of the project.
San Bernardino County approved one other real estate investment. It allocated a $40m commitment to the Hancock Timber VIII investment fund. This investment will complete a 2% targeted allocation that the pension fund made to timber in 2004.