The Contra Costa County Employees Retirement Association (CCCERA) is looking to invest as much as $241 million of equity into closed-end real estate funds, with an emphasis on distressed opportunities.
At its May 8 meeting, the $5.95 billion pension system’s board approved a measure to invest up to $60 million in value-added real estate investment strategies and $25 million in opportunistic strategies. In addition, the board approved a plan to invest approximately $155 million in distressed real estate opportunities. Documents from CCCERA did not specify the timeframe for these investments, which are being made to reduce the pension plan’s exposure to REITs.
“While there may be a continuance of ‘extend and pretend,’ we believe that more properties with problem loans will be unloaded onto the market, creating tremendous real estate opportunities through the distressed channel,” CCCERA documents stated.
As of March 31, CCCERA had a target allocation to real estate of 12.5 percent, or $744 million, $528 million of which is allocated to closed-ended real estate funds. However, the actual investment in closed-ended real estate funds on March 31 was $419 million. This additional allocation therefore serves as a means of addressing that underweight to funds, as well as taking advantage of low prices available outside of the core real estate space, the documents noted.