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Los Angeles Pension Fund Doubles the Value on the Sale of Apartment in Renton

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By Jon Peterson

The Los Angeles County Employees Retirement Association has sold the 288-unit Pebble Cove Apartments in Renton for $49.5 million, or $171,875 per unit, according to an e-mail received from the pension fund. The investor had owned the property since 2000 when it paid $22.7 million for the property.

“The sale of this asset was motivated by property type considerations at the portfolio level as well as high demand in the capital markets for such assets,” says John McClelland, principal investment officer for real estate for LACERA.

The net proceed on the sale was $28 million. Sales proceeds are aggregated within the fund treasury for deployment as needed. LACERA had previously placed $19 million of debt on the asset. This property had been held in a separate account relationship with Atlanta-based Invesco Real Estate.

The buyer of the property was San Francisco-based Jackson Square Properties. According to its Web site, the company owns a total of eight apartment assets in the greater Seattle market. The other properties are located in Seattle, Vancouver, Newcastle and Everett. Seattle is one of its targeted markets for investment. The others are Portland, Northern and Southern California, Salt Lake City, Chicago and Denver.

The buyer looks to invest in apartments that are at least 100 units. These can be A, B or C quality assets that are value-add or rehabbed communities. The investments could be with bond-financed or market rate assets.

LACERA owns one other apartment complex in the Seattle market as a separate account investment. This is the 173-unit Tower 801 high-rise asset in Seattle. The manager of the property is Chicago-based Capri Capital.

The pension fund mainly invests in real estate though two groups of separate account managers. One group is seasoned managers with which it has had a long-term relationship. These include Capri Capital, Deutsche Asset & Wealth Management, Invesco and TA Associates. These managers have been allocated $400 million of new capital as part of the pension fund’s investment plan for the 2015/2016 fiscal year.

The pension fund has three other separate account managers that it hired in 2013. These are Clarion Partners, Heitman and Stockbridge. Each of these has been allocated an additional $100 million for the new fiscal year.