By Jon Peterson
The Marin County Employees’ Retirement Association is making plans to sell off its $129.2 million direct real estate portfolio that the pension fund owns in the San Francisco Bay Area.
“We have owned these assets a long time in our portfolio. In some situations this has been the case for 15 years. We believe that we can achieve a higher level of portfolio diversification by selling these assets and re-investment them in core open-ended commingled funds that own a national portfolio of properties,” says Jeff Wickman, retirement administrator for Marin County Employees.
One of the factors in the fund’s decision is the strength of the current market. “These properties are located in a market that is preforming at a very high level. This was part of our thinking as well,” said Wickman.
The pension fund made the initial approval of this action at its June 12th investment committee meeting. This move will be discussed again by this investor at its July 9th board meeting.
“We are not under any pressure to sell these properties. This will not be a fire sale. If we don’t get what we consider the correct level of pricing, we can take them off the market,” said Wickman.
There are a total of seven properties in the portfolio owned by Marin County Employees. One of these is an apartment complex located in Walnut Creek. The rest of the portfolio is located along the San Francisco Peninsula. One of the assets is in Foster City. These assets include a mixture of office buildings and R&D properties.
Marin County Employees owns these assets 100 percent. It’s looking at potentially selling these assets over the next couple of years. They are currently managed by Belmont-based Woodmont Realty Advisors. This real estate manager did not respond to phone calls seeking comment for this story.
The pension fund will be re-investing the sales proceeds into two core open-ended commingled funds where it’s already an investor. These are the AEW Core Property Trust managed by Boston-based AEW Capital Management and the UBS Trumbull Property Fund run by Hartford, Comm.-based by UBS Realty Investors. UBS Realty has a regional office in San Francisco, according to its Web site, located at 455 Market Street.
These two commingled funds both own a large portfolio of assets in many markets around the country. These are for the most part newer and well occupied office, industrial, retail and apartments located in major markets.
Core open-ended commingle funds are always open to new commitments from pension funds and other institutional investors. This compares to close-ended commingled funds that a defined period where capital from investors can be accepted.
Marin County Employees remains below its 15 percent targeted allocation for real estate. Through March of this year, it had a total real estate portfolio valued at $201.9 million. This amounts to approximately 10.5 percent of its total plan assets invested in real estate.