LA County considers boosting Cornerstone account

LACERA awarded a $400m real estate debt mandate to Cornerstone and Quadrant in 2011.

The Los Angeles County Employees Retirement Association (LACERA) may increase the size of its separate account with Cornerstone Real Estate Advisers by $250 million, according to agenda materials for its 11 June Board of Investments meeting.

LACERA established a $400 million commercial real estate debt mandate in 2011, which the retirement association awarded to Quadrant Real Estate Advisers and Cornerstone.

“[Cornerstone], with significant AUM, is deeply resourced and the team can tap into its expertise during the underwriting process in such areas as engineering, legal, local market conditions, and appraisal. Cornerstone also has an experienced internal loan servicing team including special servicing capabilities that would service loans in the proposed program,” according to LACERA’s March 2011 Board of Investments minutes, which note that Cornerstone had proposed using up to 50 percent leverage on certain loans to increase returns.

LACERA had previously committed up to $150 million to Cornerstone’s Hotel Income Equity Fund II in 2008.

Cornerstone, which is headquartered in Hartford, Connecticut, had $42 billion in assets serviced or managed as of 31 December, according to its website. The firm’s real estate finance business includes investments in  commercial mortgage loans, mezzanine, CMBS, residential mortgage loans, unsecured REIT debt, construction loans and bridge financing.

LACERA had a 9.8 percent allocation to real estate as of 30 September, according to its website. The retirement association had allocated to 22.8 percent of its assets to fixed income and 8.6 percent to private equity.