The San Francisco Employees Retirement System is deciding whether to increase its allocation to real estate in the San Francisco Bay Area.
Specifically, the board is weighing whether to begin allocating up to 3 percent of its assets toward such investments.
However, the area’s high real estate prices warrant caution, according to the fund’s advisors.
From Investments & Pensions Europe:
A 3% target allocation to real estate in the nine-county San Francisco Bay Area – first mooted by the retirement board in 2013 – is still being mulled by the pension fund.
No plans were approved at a meeting this month. Its advisers, Angeles Investment Advisors and Cambridge Associates, warned against over-concentration in its real estate porfolio at a time when the pension fund is looking more broadly at real assets.
A recent board meeting document stated: “SFERS private markets team and Cambridge Associates recommend maintaining a broad allocation to real assets rather than carving the category into several pieces such as infrastructure, natural resources, or San Francisco-based real estate.”
Investment staff will approach managers active in local real estate and evaluate the merits of entering into local co-investments with them.
The staff will also explore whether there are further efforts it can undertake to source and evaluate San Francisco-based real estate investment opportunities with attractive valuations and good prospective returns.
The San Francisco Employees Retirement System manages $20 billion in assets.
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