The Los Angeles City Employees Retirement System plans to invest up to $210 million in real estate this coming fiscal year, according to a new report.
LACERS plans to put most of that money — around $140 million — into non-core assets via blind pool funds that can pounce on opportunities created in the economic wake of the coronavirus pandemic.
LACERS could invest up to $70 million with existing core fund managers, according to IPE Real Assets. The 55,000-member pension fund plans to review its existing $572 million core portfolio and could make some trades in the open-ended segment for diversification and returns.
LACERS’ open-ended portfolio includes investments in JPMorgan Strategic Property Fund and Morgan Stanley Prime Property Fund.
Around 60 percent of the city’s workforce, retired and active, receive retirement or healthcare benefits through LACERS. The fund’s portfolio totaled around $18 billion in 2019 and about $1.7 billion of that is in real estate.
Pension funds, which typically invest in office buildings and stable commercial assets, are hard hit by the economic fallout brought on by the coronavirus pandemic. When the economy bottomed out in late March, the California Public Employees Retirement System’s holdings shrunk in value by $69 billion or around 17 percent from just a month prior, according to the Sacramento Bee.
Last year, L.A. County’s biggest pension fund, LACERA, announced it would shed around $1 billion in real estate assets, although it’s unclear whether that strategy has changed since the pandemic threw the global economy for a loop. [IPE Real Assets] — Dennis Lynch