UNITED STATES - The Bond Companies has pending investments from two pension funds for its sustainability fund as the Los Angeles Department of Water and Power Pension Fund and the Teacher Retirement System for the State of Illinois have both allocated $20m (€15.3m).
Any commitment is a rare event at present as most US pension funds are not making many new investments to commingled funds while they are above their targeted allocations.
The ‘denominator' effect of the financial market movements has forced pension funds' asset allocations out, and several real estate managers have pulled commingled funds off the market while pension schemes try to rebalance through redemptions.
The Bonds Companies' sustainability fund - jointly run by the Abraham Group - is thought to be one of the few commingled funds in the United States with a green strategy as it will invest in urban projects using sustainability building technology and management practices.
That said, LA Department Water and Power and Illinois Teachers will be joining several institutional investors already in the commingled fund as TIAA-CREF has already committed $25m, along with $70m-$80m from Goldman Sachs, $20m from Los Angeles Fire and Police Pensions and $10m from Los Angeles City Employees Retirement System, in return for a projected IIR of 15.5%-19.5%.
Los Angeles Fire and Police has now invested $1.1bn of its $10.3bn in assets under management in real estate, but this means it has exceeded its 9% allocation to real estate.