By Muskan Arora

The
$15bn San Bernadino County Employees’ Retirement Association sits overallocated
by $30m within its real estate sleeve, for the first time in three years.

Earlier
this year, the system had approved a pacing plan of $575m for its private
equity sleeve and $120m for its real estate sleeve.

In
April, the system committed $150m to the Angelo Gordon Essential Housing Fund III
due to the “attractiveness of the opportunity,” as discussed in an update at
the recent meeting.

The
fund (debt strategy) targets land opportunities nearing the construction phase.
This includes land holdings in the final stages of development or earmarked for
building projects.

“We
will continue to monitor opportunities that come from the real estate space. I
would say that we have a very high bar when it comes the new opportunities,”
said Thomas Kim, investment officer at the pension fund.

While choosing managers, CIO Donald Pierce considers “having meaningful changes in the strategy and team” as a major red flag. In
a recent interview with Markets Group, the CIO highlighted his
shifting sentiments towards real estate leading to this contrary action.

“We
did not like real estate for a long
time because cap rates were so tight. It would be the first time really leaning
into a real estate market, that we were trying to avoid for many years, and not
because we thought they were bad assets, but because the price was too high,” told the CIO to Markets Group.

In
2023, the pension fund deployed $10m against a budget of $100m. A year before
that, the system invested $45m against a planned budget of $110m.

In
2021, the system invested $93m into real estate as compared to the budget of
$100m.

However,
within its private equity sleeve, the system has $217m left to allocate for the
second half of the year, as per the update.