FROM: Don Pierce, Chief Investment Officer
SUBJECT: Quarterly Report on Private Assets for the First Quarter of CY 2026
RECOMMENDATION:
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Chief Investment Officer.
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BACKGROUND:
This report highlights activity within SBCERA's private equity and private real estate allocations for the first calendar quarter 2026. As a reminder, the private equity program has a target allocation of 18% while real estate has a target allocation of 5%. Each year, the Board reviews the private equity and real estate pacing plans designed to allocate capital over time to meet the target allocation goals set by the Board. In January 2026, the Board approved a budget of $735 million for the private equity pacing plan and $155 million for real estate.
SBCERA's private asset program is designed to improve the results of the overall portfolio with investments in real estate, private credit, and private equity. Across a wide range of industries, SBCERA's investment managers carry out transactions via a global network of LPs, GPs, and intermediaries to invest capital on behalf of SBCERA. This deal flow for SBCERA's consideration is governed by SBCERA's investment management agreements or many times called a Master Custody Agreement (MCA).
To highlight the deal flow activity and pacing, we have included in this report the number of deals reviewed, declined, and approved by the investment team (see Exhibit A). This report covers the first calendar quarter of 2026, during which SBCERA investment staff approved 9 private asset investment proposals out of 26 proposed investments.
Most of the rejections fall into one or more of the following categories: high valuations, premium economics for the manager, stapled transactions (where to buy something you want, we must buy something we don't want), and governance issues (such as no board seats or observer rights).
BUDGET IMPACT:
None.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Prudent Fiscal Management
STAFF CONTACT:
Don Pie...
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