The board of the $71.3 billion Los Angeles County Employees Retirement Association, Pasadena, Calif., on Wednesday approved an RFP to search for emerging real estate and real asset separate account managers to run up to $400 million each.
The RFP, which is expected to be launched later this month or in February, would search for either one discretionary separate account manager for both the real estate emerging managers and real assets emerging manager programs, or separate managers for each asset class.
Responses to the RFP could be expected as early as the second quarter, with selection by the board in the third quarter, according to a timeline on LACERA's website.
Minimum qualifications include a five-year track record of committing capital to emerging managers, and the firm, or founding team, must have committed a minimum of $100 million to emerging managers within the past 36 months.
This is a new mandate. In January and February of 2022, the board set a target allocation of 8%-10% of real estate and real assets, up to $400 million for each of the two categories to be committed over the next three years.
The pension plan had made direct commitments to real estate and real asset emerging managers in the past, but it hadn't had an outsourced partner to make commitments to new managers, said CIO Jonathan Grabel in an interview.
The goal is to identify firms that can outperform and can grow alongside LACERA, he said.
LACERA had $12.5 billion in its real assets and inflation hedges asset class as of Nov. 30.
The RFP is expected to be posted on LACERA's website.
Separately, the board approved a 2023 work plan and strategic initiatives that include expanding its climate risk analysis to its private markets asset classes, integrating the Global Real Estate Sustainability Benchmark into its real assets program and driving terms when negotiating external manager contracts.