Updated with correction
Los Angeles City Employees' Retirement System will consider committing up to $25 million to real estate fund Asana Partners Fund I, shows a report to the investment committee by Townsend Group, the $14.9 billion pension fund's real estate consultant.
The pension fund's investment committee will decide on Tuesday if it will recommend the $25 million commitment.
This is Asana's first institutional commingled fund and the firm qualifies as an emerging manager for LACERS, the Townsend report stated.
The fund will invest in retail real estate in 11 key cities in the U.S.: Austin, Texas; Dallas; Houston; Nashville, Tenn.; Atlanta; Charleston, S.C.; Charlotte, N.C.; Raleigh, N.C.; the District of Columbia; New York; and Boston.
Separately, at its Aug. 9 meeting, the investment committee is scheduled to decide whether to recommend the board renew for three years the contract of private equity consultant Portfolio Advisors. Portfolio Advisors' contract expires Jan. 24.
Portfolio Advisors has during its tenure as LACERS' private equity consultant made annual commitments of $325 million to $350 million, mainly in lower- to middle-market buyout funds, according to a report by Thomas Moutes, LACERS' general manager. This strategy “allows LACERS the potential for higher risk-adjusted returns,” Mr. Moutes noted. Renewing Portfolio Advisors contract will help LACERA maintain a diversified private equity portfolio. LACERS expects to reach its 12% private equity target allocation in three years, he said.
The committee is also scheduled to vote on recommending a 2017 fiscal year strategic plan for its $859 million real estate portfolio. Under the plan, LACERS would commit a total of up to $300 million through 2018, a Townsend report stated. The portfolio targets 60% core real estate and 40% non-core. The proposed strategic plan also includes targeting specialist real estate operators such as builders to reduce fees and exploit niche expertise and investment sourcing capabilities. And LACERS officials would target commitments to preferred property types and regions including U.S. retail and U.S. industrial.
Also, LACERS placed AJO on its watchlist because of performance. AJO manages a $148 million domestic large-cap value equities portfolio for the system. Ted Aronson, AJO founder, is scheduled to provide a report at the investment committee’s Aug. 9 meeting. AJO has been a LACERS managers since 2001.
“The 2016 market environment has been unkind to our portfolio positioning in an unprecedented way, and indeed, we deserve our watchlist status,” said Gina Marie N. Moore, portfolio manager at AJO, in an e-mail. “Along with a process for healthy dialogue, LACERS affords investment managers the benefit of time, allowing a well-seasoned investment process the opportunity to recover. What more could a manager ask for?”
