UNITED STATES - San Diego City Employees' Retirement System has approved $135m (€111m euros) in new real estate investments following a consultation with The Townsend Group.
More than half of the new allocation will be directed towards extending an existing separate account managed by Invesco Real Estate, which Townsend noted had consistently provided income distributions averaging more than 7% since inception, despite capital value declines.
The additional capital will enable the pension fund to seek further diversification within the segregated account, which currently holds a total of five properties with a combined market value of $82.9m.
The intention is to add more office assets and one additional grocery-anchored retail center to the portfolio. The office deals would need to be high quality properties in locations with strong occupancy and minimum near-term rollover. Potential markets are San Francisco, Boston, New York, Washington DC and Austin.
San Diego City Employees also made a $30m allocation to the JP Morgan Strategic Property Fund, which has consistently generated strong long-term performance, according to Townsend.
The core open-ended commingled fund is a top quartile performer over the three, five, seven and ten-year periods.
The pension fund also approved a $30m commitment to the UBS Trumbull Property Fund, which Townsend stated employs a more conservative strategy than most of its peer group.
The consultancy noted that the strategy makes the fund a top performer at the troughs of the market cycle and an underperformer at its peaks. Only 5% of the core open-ended fund is considered value-added and there is no exposure to forward commitments.