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SDCERS to redeem out of AEW and UBS open-ended core US funds

San Diego City Employees Retirement System (SDCERS) plans to redeem $119m (€105m) from the UBS Trumbull Property Fund and the AEW Core Property Trust due in part to underperformance and to rebalance its portfolio.

In a board meeting document, SDCERS said $34m would be withdrawn from the UBS fund, a $22.7bn open-ended core vehicle that had a $3.1bn redemption queue as at last month.

The queue could mean SDCERS would have to wait for at least 18 months to receive its capital.

IPE Real Assets reported in March that UBS had earmarked $2bn of assets to be offloaded as it looks to meet redemptions.

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SDCERS said it intends to take out all of its $85m investment in the AEW Core Property Trust. The fund has no redemption queue, so SDCERS expects to receive the capital by the fourth quarter this year if it files its redemption this month.

The pension fund’s real estate consultant The Townsend Group said part of the rationale for the redemption is that the fund’s performance has lagged the ODCE Index over one, three and five-year periods – although Townsend said the performance could improve in the future.

Another reason is that both SDCERS and the AEW fund are overweight retail assets.

SDCERS is considering investing in non-core real estate over the next 12 months, which could include diversifying its European real estate exposure into the Nordics.

 

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