San Diego City Employees' Retirement System's board on July 14 approved a plan to commit a total of $100 million to non-core real estate in fiscal year 2024, which started July 1.
Officials at the $10.5 billion pension fund plan to make three to four new commitments of $50 million to $75 million in sector-specific strategies such as residential, logistics, health care, self-storage, data centers, hospitality or neighborhood/community retail. Pension fund officials also plan to make commitments of $25 million to $50 million to structured real estate debt.
SDCERS has an 11% real estate target with 70% of that to core and 30% non-core. The pension fund had $1.2 billion in real estate as of Dec. 31, with 19% of the portfolio's net asset value in non-core real estate.
The pension fund's fiscal 2024 real estate investment plan also includes reallocating up to 100% of its core debt fund holdings — made up of $50 million in Mesa West Core Lending Fund, an open-end core real estate debt fund managed by Mesa West Capital, and another $50 million in MetLife Commercial Mortgage Income Fund, an open-end, diversified core domestic real estate debt fund managed by MetLife Investment Management — to core-plus equity for its additional return potential through a mix of income and appreciation, said a report from Meketa Investment Group, SDCERS' real estate consultant, to the board.
