The Alameda County Employees’ Retirement Association has approved a $25 million commitment for the CIM VI Urban REIT Fund, a new commingled investment vehicle aimed at acquiring operating properties in established or transitioning urban areas.
The projected total capital raise for the fund is in the neighborhood of $1 billion, according to industry sources. CIM has set a $450 million maximum on the size of the equity that can be put into a single transaction.
Los Angeles-based CIM Group invests in major markets nationwide, including the San Francisco Bay Area, Washington, D.C., Las Vegas, Dallas and its own L.A. home turf. It considers office, retail, hotel, residential and mixed-use properties.
The real estate manager is still raising capital for the commingled fund. It declined comment for this story, as did the Alameda County retirement system, whose chief counsel, Robert Gaumer, also declined to provide staff reports about the CIM fund, saying they are not subject to public disclosure. The Registry has sought clarification from Gaumer, who said he could not be available until next week.
With the commitment to CIM VI, the pension fund is very close to its targeted allocation to real estate. Its real estate portfolio was valued at $289 million through the end of May 2011, according to its Web site. That is 5.25 percent of its $5.5 billion in total plan assets. The pension fund has a 6 percent target allocation for real estate. ACERA has 20,200 members who receive benefits.
CIM has attracted hundreds of millions of pension fund dollars to its urban real estate funds over the years. One of its bigger pension fund clients has been the California Public Employees’ Retirement System through the pension fund’s California Urban Real Estate program, or CURE.
CalPERS is now abandoning CURE partnerships and has said that over the next two to three years it will transition its real estate program to an investment strategy that focuses on “core” real estate, or well-leased properties built in the last 10 years located in major markets. CalPERS expects to put up to 75 percent of its investments in core real estate funds.
Two CIM-sponsored investment funds will be affected. CalPERS invested $125 million in 2000 and $280 million in 2003 in the CIM Urban Real Estate Fund. The pension fund placed a value on this investment of $496 million through December 2010. The other is CIM Fund III. CalPERS made its first investment in this fund in May 2006. The value of this investment was $264.1 million at the end of last year.
The Alameda County pension fund board voted to allocate the $25 million to CIM at its June 16 meeting. Its real estate consultant is The Townsend Group. Townsend Principal Micolyn McGee, who has her office in San Francisco, manages the Alameda County work.
Other pension funds that have contributed capital into CIM VI include the Virginia Retirement System based in Richmond, Va., which approved a $150 million allocation into the fund at the end of last year. The pension fund placed the investment into the enhanced-core sector of its real estate portfolio, which it defines as existing properties where value can be enhanced through expansion or re-leasing.