LA County pension fund dips into distressed European real estate

The retirement association is investing $50M into a fund managed by Angelo Gordon

Mar.March 16, 2018 01:00 PM
Paris skyline (Credit: Wikimedia Commons)

A pension fund representing 165,000 current and former Los Angeles County employees continues to diversify its investment strategy, with the latest move a $50 million infusion into distressed and underperforming real estate and debt in Western Europe.

The Los Angeles County Employees Retirement Association committed the money to AG Europe Realty Fund II, a fund managed by Angelo Gordon & Co., according to Pensions & Investments. The fund has a target of $750 million and a cap of $850 million.

LACERA’s latest investment is in line with its 2016 plan to increase its allocation in international real estate to 15 percent over the next three to five years. Now, nearly all of LACERA’s $6.2 billion in real estate investment has been in the U.S. The total amounts to about 11 percent of the $56 billion pension fund, as of mid-2017.

About a third of the fund’s investment in real estate is in multifamily properties. Another 22 percent is in office, followed by smaller allocations in retail and industrial.

Angelo Gordon & Co. is a private alternative investment manager headquartered in New York. Since 2009, the firm has invested around $2 billion in 42 real estate transactions. Investing in distressed debt and real estate is a core part of its business.

According to LACERA documents, the fund will focus on “the largest, most liquid and institutional markets” including the United Kingdom, the Netherlands, Germany, France, and Ireland, Spain, Italy, and the Nordics.

AG Europe Realty Fund II is targeting net returns of 14-15 percent each year. [Pension & Investments] — Dennis Lynch

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