SDCERS commits to Europa

The $5.8 billion pension system has committed half of its non-core real estate allocation for 2013 to Europa Capital’s latest fund.

The San Diego City Employees’ Retirement System (SDCERS) has committed $20 million to Europa Capital’s latest opportunistic real estate fund, Europa Fund IV.

According to documents from the $5.8 billion pension system, SDCERS’ annual real estate investment plan for the 2013 fiscal year recommends a total of $40 million in commitments to non-core real estate strategies. With aid from its consultant, Hewitt EnnisKnupp, SDCERS decided to contribute half of that total to Europa Fund IV at its August 8 board meeting.

Documents from the meeting cite Fund IV’s experienced team and expansive network as reasons for committing. SDCERS also currently invests in Europa Fund III, and two-thirds of Fund IV’s current capital raised has come from prior investors.

In a staff report, Jamie Hamrick, investment officer at SDCERS, pointed to the appeal of the fund’s investment strategy “to acquire a diversified portfolio of real estate investments and generate capital growth through recapitalizations, refurbishments and repositioning of properties on a pan-European basis.”

Fund IV has an equity target of €750 million and held a first close on commitments totaling roughly €170 million in October. Among the fund’s other investors is the Los Angeles County Employees’ Retirement Association, which made a €50 million commitment last year.

Fund IV, which is targeting a gross internal rate of return (IRR) of 25 percent and a net IRR of 20 percent, aims to add value through development, refurbishment and corporate restructuring in investments, primarily in the United Kingdom, France and Germany. The fund’s current investments include a 1,645,000-square-foot light industrial portfolio in the UK and the 162,000-square-foot Tour Vista in France.