Los Angeles pension taps real estate, private credit

The $19.6 billion Los Angeles Water and Power Employees Retirement System tapped two managers in recent months within its real estate and private credit asset classes.

The roughly $1 billion diverse real estate program at the pension fund saw the addition of the Mesa West Real Estate Income Fund V, a closed-end, value-add debt fund, with an allocation of $100 million in total.

The real estate fund originates, purchases and manages floating rate loans secured by transitional and distressed commercial real estate assets. Mesa West V focuses primarily on traditional property types (office, multi-family, industrial, retail, hospitality) predominantly in primary and strong secondary markets in the U.S. The investments include first mortgage loans, mezzanine loans, preferred equity and other loans including those to funds or entities that own commercial real estate.

Within private credit directly, the Los Angeles Water and Power fund trustees approved another $100 million allocation to Ares Pathfinder Core Fund. The fund is open-end and is focused on income while focusing on downside protection by structuring short-term, illiquid and asset-backed loans.

The private credit portfolio was constructed in late October 2020 with the approval of a restructuring of the plan’s fixed income asset class. It includes a 10% allocation to private credit within the broader fixed income portfolio.

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