Sacramento County Employees’ Retirement System plans to invest in real estate funds managed by Och-Ziff Real Estate and Prologis.

The pension fund has approved a $35m (€26.2m) commitment to Och-Ziff Real Estate Fund III, which is pursuing a distressed real estate strategy predominantly in the US.

Scott Chan, chief investment officer for the pension fund, said: β€œThe commitment into the Och-Ziff fund was done as this manager has a strong track in making successful counter-cyclical investments in real estate.”

Och-Ziff is seeking to raise between $1bn and $1.5bn for the fund, which will invest in individual assets and portfolios, including properties, loan pools and real estate operating companies. Up to 20% of the fund can be invested outside the US. The fund is targeting gross returns of more than 20%, before tax.

Sacramento County has also approved two $25m commitments to the Prologis Targeted Europe Logistics Fund and the Prologis Targeted US Logistics Fund.

β€œWe made the commitments to the Prologis funds as we were under allocated to industrial assets,” said Chan.

β€œWe could invest more capital in this property type before we reach our allocation level for industrial.”

Both Prologis funds are open-ended and pursue core strategies.

Around 95% of the European fund’s assets are situated near airports or sea container ports of Paris, London, Amsterdam, Frankfurt, Hamburg and Rotterdam. Prologis has a 43.4% stake in the fund.

The US fund invests in major markets, including San Francisco, Southern California, Seattle, New Jersey and Florida. Prologis holds a 25.8% stake in the fund.

Sacramento County intends to sell assets from its separate accounts, which are managed by Cornerstone Real Estate Advisers and BlackRock Realty.

β€œWe think that it makes sense to sell some assets from our separate accounts to take advantage of the near peak values for core assets and re-invest this capital into commingled funds,” said Chan.

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