Los Angeles County Employees Retirement Association (LACERA) has dropped Invesco Real Estate as one of its separate-account managers, as it reconfigures its real estate portfolio.
According to a board meeting document, the $506m (鈧�418m) portfolio managed by Invesco will be transferred to Clarion Partners, another separate-account manager.
LACERA said the move was made due to underperformance by Invesco as well as a desire to consolidate and reduce its separate accounts in favour of open-ended core funds.
An Invesco spokesperson told 91传媒在线: 鈥淲e had a wonderful 25-plus year relationship with LACERA. Over the past 17 years, our business and the industry has evolved from a focus solely on separate accounts to a balance between separate accounts and funds.
鈥淲e embrace and support LACERA鈥檚 evolution towards funds and look forward to continuing our relationship through our commingled funds.鈥�
The board meeting document shows that Invesco underperformed the ODCE core US property fund benchmark over, three, five and 10-year periods, although it outperformed by 0.05% since inception.
The underperformance was attributed primarily to two large retail investments in New York and Pennsylvania, which have a combined value of $149m.
The portfolio also includes two industrial assets in Southern California worth a combined $150m, office buildings in Houston and Dallas worth $142.5m, and an apartment complex in Denver valued at $64.5m.
LACERA also said a different manager could bring a fresh perspective to managing assets, including the two retail properties.
Heitman and Stockbridge, two of LACERA鈥檚 separate-account managers, were considered alongside Clarion Partners to take over the portfolio.
DWS was ruled out due to concentration risk. The company already manages a $1.9bn of assets for the pension fund, representing 35% of its real estate portfolio.
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