UNITED STATES - City and County of San Francisco Employees’ Retirement System has approved an allocation of $750m ($553.7m euros) to be invested in real estate for fiscal year 2008.
Assisted by real estate consultant, The Townsend Group, the allocation is set to kick in from July 1st of this year and one of its first new initiatives for San Francisco City and County will be to invest $150m in a global securities investment program.
Global securities are expected to achieve returns in the 12% to 14% range, said Micolyn Yalonis, principal at Townsend – the firm now helping to find suitable properties.
"One of its goals was to make the annual investment plan as flexible as possible," Yalonis said.
"We wanted to make the plan flexible enough so that the pension fund could take advantage of certain opportunities that might become available in the marketplace."
That said, San Francisco City and County will not be allocating any new capital for fiscal 2008 in core strategies as it believes returns on core assets are too low and will not be changing for the next several years.
In January of 2007, a separate managed by AMB Property Corporation was changed from value added to core to better reflected the life cycle, risk and likely returns going forward for the account and to make the pension fund’s portfolio in excess of its long-term 30% target for core assets.
San Francisco City and County has now allocated a total of $600m for its non-core portfolio, $300m of which will be for value-added investments into both existing separate account managers Invesco Real Estate and RREEF, and investing in new commingled funds,
The other half of the non-core portfolio will involve a mixture of a high return and international strategies so $180m has been allocated for high return commingled funds and $120m into commingled funds with an international focus.
