To:Sam Kunz, CIO, Chicago PABF
From:Kevin Leonard, Partner
Mike Cairns, Partner
Kristen Finney-Cooke, Senior Consultant
Date:November 5, 2018
Subject:Scope of Value-Add/Opportunistic Real Estate Investment Manager Search
The Chicago Policeman’s Annuity and Benefit Fund (“PABF”) has authorized NEPC’s to conduct/facilitate a search for Value-Add/Opportunistic Real Estate (“RE”). The PABF has proposed a $10 million allocation.
The purpose of employing a Real Estate manager (or multiples thereof) is to provide an additional layer of diversification benefits. The tools of a RE manager will diversify risk exposure within the portfolio. The Fund’s goal for the Real Estate portion of the overall plan is to achieve a higher level of return (net of fees) with an equal or lesser level of volatility than the NCREIF Property benchmark.
To be considered for appointment as an RE investment manager pursuant to this proposal, investment management firms shall have not less than:
a)The key decision makers must each possess more than 10 years investment experience and a minimum of 2 years experience in the specific RE strategy; Two (2) years verifiable RE investment experience;
b)Minimum investment staff of 5 individuals;
c)A two (2) year (the most recent two year period ending December 31, 2010) verifiable AIMR compliant investment performance record;
d)Minimum Real Estate fund size of at least $100 million;
e)The investment manager must be able to provide historical allocation data;
f)Completion of the NEPC Real Estate Questionnaire and appendices/attachments;
g)Fund offering documents for the proposed fund;
h)The fund must be open or able to accept assets in the next 9 months;
i)Acknowledge in writing that you would be a fiduciary on behalf of the Fund in accordance with the Illinois Pension Code, 40 ILCS 5/1-109;
j)Comfortable with the Illinois Freedom of Information Act (FOIA), 5 ILCS 140 et seq., that the Fund adheres to, which includes, but is not limited to disclosure of fee schedules;
k)Confirm your ability to comply with IL PA 96-0006 relating to Placement Agents and Third Party Marketers. Specifically Section 145 prohibits contingent and placement fees, no third party marketers can be used for gaining a fund investment. A side letter or other form of agreement will be required confirming that the investment manager or general partner has not and will not retain a person or entity to attempt to influence the outcome of an investment decision of the investor for compensation, contingent in whole or in part upon the decision of the investor.
NEPC acknowledges the desire of the PABF to include MWDBE managers in all its activities, and encourage all such firms meeting the above criteria to apply.
Respondents to the RFP must be willing to undergo NEPC’s full investment-level and operational due diligence, including requests for additional information and onsite visits.