The Los Angeles Fire and Police Pensions (LAFPP) has decided to shift its real estate investment strategy to focus more on stable, income-producing properties and less on riskier, opportunistic investments.
Documents from the $13.6 billion pension plan reveal that LAFPP recently approved a decision to move from a 50:50 allotment between core and non-core real estate to a 60:40 split in favour of core. Moving forward, LAFPP intends for up to 70 percent of its real estate investments to be in core real estate products, while investing as little as 30 percent in non-core.
This new investment policy is based on the recommendations of its real estate consultant The Townsend Group. As of 30 June 2011, LAFPP had $1.1 billion invested in real estate. Sources told PERE that this change in policy has nothing to do with LAFPP having any negative experiences with investments in opportunistic or value-added real estate funds. Representatives from Townsend declined to comment.
The LAFPP’s shift towards stable real estate investments follows a number of LPs moving their portfolios away from opportunistic and towards core. Institutional investors such as the New Mexico State Investment Council, the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, among others, recently have adopted this investment policy.
For more coverage on LAFPP and its investment policy change, click here.