LACERA plans defensive re-weighting of real estate portfolio

Los Angeles County Employees Retirement Association (LACERA) is planning to allocate $600m (€542m) of fresh capital for its domestic real estate separate account managers in the coming 12 months.

The pension fund has allocated for the capital for its 2017-18 fiscal year, according to a board meeting document, and it will be made available to its roster of managers, including Capri Capital, Deutsche Asset Management, Invesco Real Estate, TA Associates, Clarion, Heitman and Stockbridge.

LACERA said it will release capital periodically for core, value-added and high-return investments based on deal flow and other portfolio considerations.

The separate account managers will be encouraged to focus on industrial properties, but will be able to consider other major property types.

The board meeting document shows that LACERA it believes industrial properties tend to perform well in economic downturns.

Its exposure to industrial property is also set to decrease as a result of a strategic initiative expected to be completed in the second quarter of 2017.

The pension fund is also looking to maintain a defensive position by keeping around 70% of its portfolio in core assets with a view to gaining downside protection should a downturn occur.

LACERA will also be selling assets from its portfolio into what it deems to be a competitive market.

The pension fund will consider reinvesting capital into real estate debt strategies. It is evaluating the debt capabiliities of several of its existing real estate managers, with a view to expanding their mandates.

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