Key Takeaways
- • Los Angeles City Employees' Retirement System (LACERS), a $13.0 billion pension fund, has issued an RFP to select one or more investment managers to oversee approximately $65 million in a global or U.S.-focused REIT strategy.
- • Qualified managers must demonstrate at least $50 million in co-investments within the proposed product and manage a REIT product with minimum assets under management of $330 million.
- • Performance benchmarking requires alignment with major indices including MSCI U.S. REIT Index, FTSE NAREIT All Equity Index, FTSE EPRA/NAREIT Developed Index, or S&P Global REIT Index, depending on strategy focus.
- • Managers must demonstrate positive information ratios versus their product benchmark for at least 60 percent of rolling 12-month periods, establishing a quantitative performance floor for consideration.
- • LACERS allocates approximately 5 percent of its total assets to real estate strategies, positioning this REIT mandate within a broader institutional allocation to listed real estate securities.
Summary
The Los Angeles City Employees' Retirement System, managing $13.0 billion in pension assets, has launched a request for proposal targeting investment managers for a REIT strategy mandate worth approximately $65 million. The RFP seeks qualified firms capable of managing either a global or U.S.-focused real estate investment trust portfolio, reflecting LACERS' ongoing effort to diversify its real estate exposure through listed securities.
Prospective managers face stringent qualification thresholds designed to ensure operational scale and demonstrated commitment. Applicants must have co-invested a minimum of $50 million in the proposed REIT product and manage a strategy with at least $330 million in assets under management. These requirements underscore LACERS' preference for established managers with substantial skin-in-the-game and proven track records in REIT management at institutional scale.
The RFP establishes performance benchmarking standards tailored to strategy focus. U.S.-focused products will be measured against the MSCI U.S. REIT Index, FTSE NAREIT All Equity Index, FTSE NAREIT Equity Index, Wilshire REIT Index, or Wilshire Real Estate Securities Index. Global strategies must benchmark against either the FTSE EPRA/NAREIT Developed Index or S&P Global REIT Index. A critical performance hurdle requires managers to achieve positive information ratios versus their designated benchmark for at least 60 percent of rolling 12-month measurement periods, establishing an objective performance threshold for contract retention and evaluation.
Real estate represents a core allocation within LACERS' diversified portfolio, comprising approximately 5 percent of total assets. This REIT mandate sits within a broader institutional infrastructure, allowing LACERS to gain exposure to listed property securities alongside traditional real estate holdings and alternative property strategies.
Prospective managers face stringent qualification thresholds designed to ensure operational scale and demonstrated commitment. Applicants must have co-invested a minimum of $50 million in the proposed REIT product and manage a strategy with at least $330 million in assets under management. These requirements underscore LACERS' preference for established managers with substantial skin-in-the-game and proven track records in REIT management at institutional scale.
The RFP establishes performance benchmarking standards tailored to strategy focus. U.S.-focused products will be measured against the MSCI U.S. REIT Index, FTSE NAREIT All Equity Index, FTSE NAREIT Equity Index, Wilshire REIT Index, or Wilshire Real Estate Securities Index. Global strategies must benchmark against either the FTSE EPRA/NAREIT Developed Index or S&P Global REIT Index. A critical performance hurdle requires managers to achieve positive information ratios versus their designated benchmark for at least 60 percent of rolling 12-month measurement periods, establishing an objective performance threshold for contract retention and evaluation.
Real estate represents a core allocation within LACERS' diversified portfolio, comprising approximately 5 percent of total assets. This REIT mandate sits within a broader institutional infrastructure, allowing LACERS to gain exposure to listed property securities alongside traditional real estate holdings and alternative property strategies.
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