REAL ESTATE – California’s San Bernardino County Employees Retirement Association has awarded separate account manager American Realty Advisors a new $25m allocation and approved a new value-added strategy.
The real estate manager has already invested $120m of equity for the fund. All of this capital was placed into the market with a core investment strategy.
The new allocation will be a more value-added approach. Scheme investment officer Don Pierce said: “It’s a very tough market today to find core assets. There were some deals that we passed on in the past because we had established a core investment mandate. We want to make sure that this won’t be happening in the future.”
The new investment strategy defines value-added transactions in two ways. One would be the purchase of properties that have leasing challenges. The other is buying properties with 60% to 65% leverage. The old parameters had no more than 50% leverage.
San Bernardino County will only be buying existing properties. The pension fund plans on investing in the four main property types of office buildings, industrial properties, shopping centers and apartments.
The pension fund anticipates that the new allocation will allow it to add two to three additional properties to its portfolio. American Realty will be looking for properties on a nationwide basis in the major metropolitan areas.
San Bernardino County doesn’t expect to be too active in real estate in the near future. Pierce said, “We are now over allocated in the real estate asset class. I wouldn’t think we would be that active in the near term.”
The fund has a targeted real estate allocation of 8%. It has now placed 9.7% of its $5.1bn of total assets in real estate.