NORTH AMERICA – The Orange County Employees Retirement System has decided to move a $104.3m (€78m) global REITs portfolio from LaSalle Investment Management into the BlackRock Developed ex US Real Estate Index Fund.
The pension fund made the decision on the advice of its real estate investment consultant, RV Kuhns and Associates.
Orange County cited several factors for its decision, including investment performance.
Scott Krouse, a consultant with RV Kuhns, pointed out in a board-meeting document in January that LaSalle had underperformed against the EPRA/NAREIT Developed index for the quarter to date, for the calendar year to date, over a five-year period and since inception.
David Beeson, investment analyst for the scheme, added that the global real estate securities portfolio managed by LaSalle provided too little international diversification.
Approximately 50% of the mandate is invested in real estate securities in US.
Orange County first hired LaSalle for global REITs in June 2007 with a $75m mandate.
This investment was expanded twice – in June 2009 and March 2011, with a new $10m allocation on each date.
In other investment news, Los Angeles Fire and Police Pensions has sold an apartment complex in Tempe, Arizona, and will re-invest the proceeds into open-ended commingled funds.
The pension fund sold the 568-unit Galleria Palms complex for $52.5m to the State of Arizona after the state condemned a portion of the property to expand a nearby freeway.
The sales price is a 2010 value, which is when the court granted possession to the state.
Los Angeles Fire and Police did not get full value on the property until early this year.
The cap rate on the transaction was 5.8%.
The property was built in 1997, and the occupancy was typically in the high 90% range.
Los Angeles Fire and Police had first purchased the property in 2000 for $43.7m.
This transaction was done through the pension fund's separate account manager, Heitman.