Orange County Employees Retirement System, Santa Ana, Calif., is searching for a real estate debt manager to run a portfolio that could be as large as $75 million and which would provide financing for real estate assets, said Robert Kinsler, spokesman for the $10.7 billion pension fund, in an e-mail.
Currently, OCERS has very limited exposure of 1.7% to real estate debt. R.V. Kuhns & Associates is assisting the staff in a shortlist search and will present a list of finalists to the investment committee at a future meeting. Interested managers should contact R.V. Kuhns.
R.V. Kuhns' current universe of commingled real estate debt funds under consideration includes but is not limited to Colony Capital's Colony Distressed Credit & Special Situations Fund III, Mesa West Capital's Mesa West Core Lending Fund, Oaktree Capital Management's Oaktree Real Estate Debt Fund, Square Mile Capital Management's Square Mile Credit Partners Fund and True North Management Group's True North Real Estate Fund III, according to a memo to the investment committee.
Separately, the pension fund hired three international direct-lending managers — Park Square Capital, Hayfin Capital Management and Capula Investment Management — to run a total of $150 million, Mr. Kinsler said.
Park Square, Hayfin and Capula were selected by the investment committee to each manage $50 million. OCERS did not issue an RFP. Hedge fund consultant Aksia and OCERS investment staff recommended finalists to the investment committee, which made the selections at its Oct. 30 meeting.
The pension fund also committed up to $64 million to Gotham Asset Management in its Gotham Long/Short 115/65 fund.
The investment committee also changed the portfolio composition target for long‐term core and non-core real estate portfolios to 60% or more to core and 40% or more to non-core from 70% or more to core and up to 30% to non-core. In a memo to the investment committee, Chief Investment Officer Girard Miller stressed that his preference is to take a ”relatively conservative approach to adding non-core real estate” to the portfolio to avoid “adding risk in the real estate portfolio through investments in vulnerable, cyclical non-prime assets.”
Mr. Miller's recommendation, adopted by the committee, was to incrementally move toward the allocation shift with a sequence of appropriate searches in markets that offer the best risk-reward opportunities in the next two years.