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San Diego City Employees allocates $90 million to opportunistic debt, real estate debt

San Diego City Employees Retirement System has committed a total of $90 million to two alternative investment funds, according to a summary of board actions.

The board committed $50 Million to Davidson Kempner Special Opportunities Fund IV, an opportunistic debt fund managed by Davidson Kempner Capital Management. The $7.2 billion pension fund has invested with Davidson Kempner in the past.

Separately, SDCERS committed $40 Million to Oaktree Real Estate Debt Fund II, a value-added real estate debt fund managed by Oaktree Capital Management (OAK). Fund executives will seek to invest in a modestly leveraged portfolio that could include commercial mortgage-backed securities, mezzanine loans, real estate-related corporate debt, commercial first mortgages, residential first mortgages and subordinated secured debt. The fund will make investments primarily in the U.S. with investments of up to 30% made in the U.K., Germany, Japan and South Korea, according to a staff report. This is the first time the pension fund has invested with Oaktree.