By Jon Peterson
Sacramento County Employees’ Retirement System will be selling the 94-unit Hillside Village apartment complex in Berkeley as part of a portfolio sale of the six separate account assets that the pension fund currently owns.
The pension fund is looking at selling this portfolio and making an investment into one core open-ended commingled fund for approximately $250 million, as sated by sources familiar with this transaction. The property in Berkeley has an estimated gross asset value of $58.1 million, as stated by the pension fund in a board meeting document. This includes a mortgage on the property of $13.5m. The asset is located at 1801 Shattuck Avenue.
The other properties in the portfolio are a mixture of assets outside of the San Francisco Bay Area. Two of the properties are in the State of Washington. This is the 72,237 square foot Lake Washington office building in Seattle and the 113,449 square foot Harbour Pointe grocery-anchored shopping center in Everett. The other three assets in the portfolio are two apartment complexes in Los Angeles and an industrial asset in Houston. These properties are managed by either BlackRock or Barings Real Estate Advisers.
Sacramento County is taking this action on its direct separate account portfolio for several reasons. The pension fund wrote in a board meeting document that the investor would receive immediate exposure to a diversified open-ended core fund. This would be accomplished without the timing and pacing challenges associated with selling assets individually or as a portfolio in the open market. The sales process planned by the pension fund is expected to be quicker with it taking 90 to 120 days versus an expected 12 to 36 months.
Sacramento County will have its real estate consultant, Cleveland-based The Townsend Group, oversee the process of moving the separate account assets in a core open-ended fund. The final decision on this process will be made by the end of the first quarter in 2018.
Sacramento County has already made investments in several core open-ended funds. These include commitments with Jamestown, MetLife, Morgan Stanley, Principal and Prologis.