Los Angeles Pension Invests $500 Million In Real Estate

businessman holding small model house in his hands

The Los Angeles County Employees Retirement Association (LACERA) has invested $506 million in real estate, including two apartment complexes, an office building and a distribution center.

From IPE Real Estate:

The US pension fund agreed eight separate account purchases in gateway and secondary markets.

Two of the investments, made by Clarion Partners, were in core assets and leveraged at 50%.

LACERA invested $300m in the Palazzo-Westwood apartment complex in Los Angeles, which, over 10 years, is expected to achieve a projected 8.5%. The pension fund took an interest-only, seven-year facility at a fixed 3.4% rate.

Clarion also bought the 138,000sqft Las Cimas IV office building in Austin, Texas for $43m.

LACERA is looking to hold the asset for 10 years, with a projected 8.4% net-of-fee return.

The transaction was funded by a floating rate loan at an interest rate of LIBOR plus 180 basis points.

Deutsche Asset & Wealth Management bought two properties for LACERA.

The $35m all-cash acquisition of the 525,000sqft Ingram Micro Distribution Center in Chicago is projected to achieve a net 8.95% IRR over 11 years.

LACERA expects a 8.25% return over 10 years for the North Clark apartment complex in Chicago, bought for $51.1m.

Stockbridge Capital Group bought two core assets and two non-core properties, investing $62.4m in the 208,705sqft Pinole Vista Shopping Center in Pinole, California and the Junction Business Park in San Jose, bought for $14.2m.

Pinole Vista is projected to achieve an 8.6% net IRR.

Non-core assets in San Diego and Fremont were also bought for a respective $16.4m and $13.4m, with expected net-of-fee returns of 9.25% and 9.5% over five and three year holding periods.

LACERA manages approximately $38 billion in assets.