FROM: Don Pierce, Chief Investment Officer
SUBJECT: 2026 Real Estate Pacing Plan
RECOMMENDATION:
title
Recommend that the Board approve the 2026 Real Estate Pacing Plan.
body
BACKGROUND:
Each calendar year, investment staff and NEPC propose target commitment levels to real estate strategies for the upcoming year. For calendar year 2026, NEPC and staff are recommending a commitment target of up to $155 million.
Within the real estate program, SBCERA currently holds assets of approximately $642 million, equal to 3.8% of total plan assets, and has an additional $218 million, 1.3% of total plan assets, in existing uncalled capital commitments to real estate funds. The top sector exposures across the portfolio are residential (40%), industrial (19%), office (18.5%), and retail (4%). Most of the exposure is in North America at 84%, Europe makes up 8% and Asia accounts for 8% of the real estate exposure.
In 2025, SBCERA committed a total of about $165 million across three real estate investments. This exceeded the pacing plan target of $145 million. The recommendation for the 2026 pacing plan incorporates the commitments above target for 2025.
Under our existing MCA, SBCERA committed $75 million to the Kayne Anderson Real Estate Partners VII Fund. About 80% of the fund is expected to be deployed in medical office and student housing and the remaining capital is expected to be invested in senior housing and light industrial properties. In addition, SBCERA committed $20 million to a medical office co-investment alongside the fund. The third commitment was about $70 million dollars (? 50 million) to the PGIM PRECap VIII Fund. This fund makes debt investments in real estate projects in the UK and Europe.
The recommended 2026 commitment pacing plan of up to $155 million is designed to build real estate exposure to the plan's long-term strategic target allocation of 5%. The recommendation aims to achieve the asset allocation target over a multi-ye...
Click here for full text