Transactions - DECEMBER 29, 2014

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California pension plan completes $536m in real estate investments

by Reg Clodfelter

The $45.9 billion Los Angeles County Employees Retirement Association has completed eight investments, six core investments and two noncore, totaling $535.8 million through three of its separate account managers, according to board documents.

The largest investment, the Palazzo-Westwood in Los Angeles, was one of two core investments completed by Clarion Partners. The 350-unit luxury apartment mixed-use project was purchased for $300 million and financed using a loan for 50 percent of the purchase price. The loan is interest-only for seven years at a fixed-rate of 3.4 percent. LACERA projects a net IRR from the investment of 8.5 percent annually over an expected 10-year ownership period.

Clarion also purchased Las Cimas, an office building in Austin, for $43.3 million. The core investment was levered using a 50 percent floating rate loan with an interest rate of LIBOR plus 180 basis points. LACERA’s projected levered net-of-fee return over a 10-year hold

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