UNITED STATES - San Francisco City and County Employees' Retirement System has fired Brookfield Investment Management as one of its high-yield commercial mortgage-backed security managers, and handed the account to its other existing high-yield CMBS manager, Pyramis Global Advisors.

San Francisco City and County and its general consultant, Angeles Investment Advisors, made the move earlier this month, according to officials, as Brookfield's net return performance for the calendar year-to-date was 8.9% compared  with a 16% excess return via Pyramis by the end of September.

Pension fund officials said they were also concerned about the executive personnel changes recently seen at Brookfield Clifford Lai, president and chief operating officer left in July and was replaced at Brookfield by Kim Redding, whose expertise is seen to be in REITs rather than in CMBS assets.

Pyramis is now managing a CMBS mandate for San Francisco City and County totalling $224m (€149m) - the $146m it ran and $78m previously managed by Brookfield.

The former Brookfield portfolio is understood to have had a significant holding in some of the worst-hit high-yield CMBS issuance from loans extended between 2005 and 2007.

The CMBS market has essentially closed off to activity since then, as its creation of the credit crunch led investors to lose confidence in the underwriting of the loans and the backing the instruments, and in the quality of the borrowers and assets responsible for backing the debt.

Pyramis is expecting to sell approximately one-third of the Brookfield portfolio over the next three months, including half of the portfolio's AAA-rated CMBS exposure, as Pyramis believes it can attain better value from higher-yielding opportunities.

San Francisco City and County holds a variety of high-yield CMBS investments, alongside investment grade debt, commercial B-notes and mezzanine loans.

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