LACERA considers expanding real estate debt strategies

The Los Angeles County Employees Retirement Association is evaluating expanding its available real estate debt strategies, according to board documents from its July meeting. The board has not yet made a decision at this time.

If approved by the board, LACERA’s current debt managers, Cornerstone Real Estate Advisers and Quadrant Real Estate Advisors, could implement the expansion.

Cornerstone, which currently manages $269 million for the pension fund, could have its mandate expanded to include construction loans, both first mortgages and mezzanine loans. Net IRRs for the two strategies are expected to be in the range of 9 percent to 10 percent for first mortgages and 11 percent to 14 percent for mezzanine loans.

Quadrant’s mandate could be expanded to include originating portfolios of senior commercial mortgages and utilizing the securitization market to issue CMBS. The firm would sell off the low-yielding CMBS classes and retain the highe