By Jon Peterson
Sacramento County Employees’ Retirement System is making plans to sell an office building in Seattle and a grocery-anchored shopping center in Everett as part of a portfolio sale to a single core open-ended commingled fund, as stated by the pension fund in a board meeting document.
One of the properties in the portfolio is the 72,237 square foot Lake Washington office building in Seattle. This property is 100 percent leased. It has an estimated gross asset value of $37.6 million. The other is the 113,449 square foot Harbour Point shopping center in Everett. This asset is 6 percent vacant with an estimated gross asset value of $41.9 million.
There is a total of six properties in the planned portfolio sale. The others are an apartment complex in Berkeley, Calif., two apartments in Los Angeles, and an industrial asset in Houston.
The plan for all of these properties is be sold to one core open-ended commingled fund for around $250 million, and Sacramento County would become an investor in that commingled fund, according to sources familiar with the pension fund’s plan.
Sacramento County will be making the change in its real estate investment strategy for several reasons. The pension fund had written in a board meeting document that it 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, taking approximately 90 to 120 days versus 12 to 36 months in a more traditional transfer process.
The pension fund will have its real estate consultant, Cleveland-based The Townsend Group, oversee the process of moving the separate account assets into a core open-ended fund. The final decision on this process is projected to 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.