Integrated Capital asks Los Angeles to rewrite the rules

The Los Angeles City Employees’ Retirement System has changed its investment agreement with one of its general partners as it senses value in the US hospitality sector.

Los Angeles City Employees’ Retirement System (LACERS) has been asked by hospitality focused private equity real estate firm Integrated Capital to change the investor agreement for one of its funds so it can start investing early.

LACERS had approved a $10 million commitment to Integrated Capital’s Integrated Capital Hospitality Fund in April last year, but the investment was contingent on the firm raising a minimum of $100 million for the vehicle.

Since then, the firm has found it difficult to raise more than $90 million of equity owing to increasingly difficult fundraising conditions, but sensing that the current investment market would yield good investment opportunities it asked limited partner LACERS for its agreement to be altered to enable it to proceed deploying the equity.

According to market experts the hospitality real estate market is witnessing a fall in values which will not reverse until 2010.

The new agreement also stipulates that the fund makes at least eight investments within the investment period to ensure the vehicle has diversification. This was not part of the original agreement.

The fund focuses on acquisitions in North America, Canada, Mexico and the Caribbean.

LACERS was advised by Ohio-based Courtland Partners.