Analysis
This initiative is part of LACERS' ongoing efforts to reach its 7% target allocation for the real estate asset class.
As of December 31, 2023, LACERS' real estate portfolio was valued at $1.23 billion, representing 5.4% of its total assets. The proposed investment plan aims to bridge the gap between the current allocation and the target.
The $450 million commitment is divided into two segments:
- Core Real Estate Investments: Up to $200 million will be directed toward core real estate opportunities. These investments are expected to be spread across two to three core or core-plus commitments. The focus will be on exploring secondary market opportunities with existing high-performance managers, targeting new blind pool core open-end fund launches, and identifying niche specialist managers in sectors where LACERS currently lacks exposure.
- Non-Core Real Estate Investments: The remaining $250 million is earmarked for non-core real estate opportunities, to be allocated across five to six different funds. The non-core portfolio strategy includes re-ups with high-conviction managers, maximizing fee savings, and assessing emerging managers with niche investment opportunities.
This investment strategy reflects LACERS' commitment to diversifying its real estate portfolio and enhancing returns by engaging with both established and emerging managers across various real estate sectors.
By implementing this pacing plan, LACERS aims to strengthen its real estate holdings, optimize portfolio performance, and achieve its long-term investment objectives.