People - MAY 9, 2013

LACERA hires three new separate account managers

by Sara Kassabian

The $39.2 billion Los Angeles County Employees Retirement System (LACERA) has hired three new separate account managers to invest up to an additional $600 million in real estate. The RFP was issued in January 2013 as part of LACERA’s 2012–2013 real estate investment plan. The Townsend Group assisted with the decision.

John McClelland, principal investment officer for real estate at LACERA, confirmed that Heitman, Clarion Partners and Stockbridge Capital Group have been selected as new separate account managers for LACERA’s real estate portfolio. Each manager will be allocated $200 million to invest in real estate.

Both Heitman and Clarion Partners will be focusing on core and value-added strategic investments, while Stockbridge will invest its $200 million in core, value-added and opportunistic strategies across apartment, industrial, retail, office and mixed-use property types.

Heitman will develop a high-quality, low-risk portfolio of stabilized assets across property types. Approximately 70 percent to 80 percent of the money will be allocated toward core investments, while 20 percent to 30 percent will be invested in value-added strategies.

Clarion will invest between 65 percent and 75 percent in core, primarily in apartment, industrial, office and retail sectors, with student housing as an option. Between 25 percent and 35 percent of the portfolio will be invested in value-added strategies.

The addition of three separate account managers is a response to the pension fund’s desire to acquire additional real estate assets. Heitman, Clarion and Stockbridge were selected to provide LACERA with more flexibility, add investment capacity and introduce new strategies and regions to its real estate portfolio.

As of March 30, 2013, LACERA’s core portfolio comprised approximately 68 percent of the pension fund’s exposure to real estate. LACERA has a target allocation of 10 percent to real estate, with a minimum allocation of 60 percent to core, and a maximum of 40 percent in value-added and 20 percent in opportunistic strategies.

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