San Francisco City & County Employees' Retirement System is seeking a commercial mortgage manager.
The board for the $10 billion is replacing AEW Capital Management, which was terminated earlier this month as one of the pension fund's two commercial mortgage managers. According to a memo from Townsend Group - the fund's real estate consultant - AEW suffered personnel turnover, proposed mortgages that didn't adequately compensate the system for the leasing risk, and was not committed to the commercial mortgage business.
AEW President Joseph Azrack countered that AEW's performance exceeded the Salomon Broad index by 250 basis points; that its mortgages are of good quality and are suitable for securitization at a future date; and that the firm is committed to the mortgage business via a REIT. The adviser selected will manager a $50 million commercial mortgage mandate.