UNITED STATES - San Diego City Employees Retirement System has redeployed REIT capital into a core direct real estate fund managed by JP Morgan Asset Management.
The pension fund committed $30m (€24.2m) to the JP Morgan Strategic Property Fund and is likely to invest a further $50m in other US commingled real estate vehicles, funded by its withdrawal of $70m from a REIT strategy in 2011.
Real estate consultant Hewitt EnnisKnupp said the move was to rebalance San Diego's real estate portfolio towards a more core weighting, although the pension fund may consider investing some of the capital into a non-core strategy.
San Diego also considered investing in UBS Global Asset Management's Trumbull Property Fund, but it preferred JP Morgan's smaller entry queue of $1.1bn to UBS's $2bn. Hewitt EnnisKnupp said it would likely to take six to nine months before San Diego's capital was deployed by JP Morgan.
The large size of the JP Morgan fund, which reported a net asset value of $15.5bn at the end of the 2011, was also seen as attractive, enabling the pension fund to gain exposure to multiple trophy office assets and large regional malls in strong markets.
Hewitt EnnisKnupp said another advantage of the Strategic Property Fund is that it represents close to 50% of JP Morgan's assets under management and, as its flagship vehicle in the US, receives a significant share of its attention and resources.
The commitment to the JP Morgan fund was approved during San Diego's investment committee board meeting on May 17.