People - JANUARY 28, 2014

Sacramento County continues search for real assets manager

by Jody Barhanovich

The $7.5 billion Sacramento County (Calif.) Employees’ Retirement System is searching for a strategic investment partner for the management of secondary infrastructure and real assets investments, according to board documents. SCERS is prepared to commit $100 million to the selected manager over a three-year investment period and a 12-year fund term.

The board’s general investment consultant, Strategic Investment Solutions, stated its belief that there is a sustained supply/demand imbalance in the property sector, and board documents point to the sector providing attractive risk-adjusted returns, inflation hedging, diversification, and moderate income and cash flow generation. SIS also suggested looking for a manager with infrastructure and energy expertise, private equity and primaries expertise, and secondaries expertise. Board documents state that SCERS will maintain veto power on any investments.

The retirement system recently committed $35 million to the MetLife Core Property Fund and $30 million to KKR Real Estate Partners America.

SCERS’ real assets portfolio includes real estate as well as infrastructure, energy products, agriculture and timber. The retirement system has approximately 11 percent of capital allocated to real assets with a target of 15 percent.

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