03/28/2013 | By Jon Peterson
The Santa Barbara County Employees Retirement System (SBCERS) is planning to increase its exposure to REITs in 2013. The pension fund is looking at making two separate kinds of commitments to REITs.
One part of the SBCERS allocation will be through the core sector of its real estate portfolio, according a document written by its real estate manager, Cleveland-based ORG Portfolio Management. The total amount planned to be invested in core strategies for 2013 is $72.5 million. This will be split up with allocations made to core commingled funds and public securities investment strategies. These investments will be done to complement the pension fund’s existing real estate portfolio.
ORG also wants the pension fund to consider investing up to $5 million for a special public securities account. The manager stated in a board meeting document that it wants this capital to be invested in a specific property type that will complement the total REIT portfolio that is currently held by the pension fund. This would mostly likely involve retail REITs. Many pension funds believe that the highest quality retail portfolios in the United States are currently owned by public companies.
These investment ideas are all part of SBCERS’s 2013 real estate investment plan. It was approved by the pension fund at its board meeting on Feb. 27. The total amount that could be invested in real estate for the year is up to $107.5 million. This action was taken based on the recommendation of ORG.
The last new commitment that SBCERS approved for REITs was a $2.5 million commitment during the fourth quarter of 2012. This commitment was put into the pension fund’s REIT manager, Harrison Street Securities. SBCERS’ last public valuation of its REIT portfolio with Harrison Street was valued at $11.3 million, as of the end of October 2012. This relationship was started in October 2011. The benchmark used for the portfolio is the FTSE EPRA/NAREIT All Equity REITs Index. SBCERS has its REIT holdings being 97 percent in the United States and 3 percent in Canada. The pension fund invests in REITs through a long-only strategy.