The Alameda County Employees’ Retirement Association (ACERA) has allocated $35 million to a private real estate fund focused on the healthcare sector. This investment targets value-add opportunities across the United States through Artemis Real Estate Partners Healthcare Fund III.
With total assets under management of $13.2 billion, the Oakland-based public pension fund is actively working to increase its exposure to private real estate, an asset class where it is currently under-allocated.
Key Takeaways
- Alameda County Employees’ Retirement Association (ACERA) committed $35 million to a new fund.
- The investment is in Artemis Real Estate Partners Healthcare Fund III, which targets U.S. healthcare properties.
- The commitment helps ACERA move closer to its 8.2% target allocation for private real estate.
- The fund aims for a 14% internal rate of return (IRR) and has attracted other major institutional investors.
ACERA's Strategic Investment in Private Real Estate
The Alameda County Employees’ Retirement Association confirmed the new commitment during its most recent investment council meeting. The $35 million investment represents a strategic move to deploy capital into a specialized segment of the property market.
ACERA, responsible for the retirement benefits of Alameda County employees, manages a substantial portfolio valued at approximately $13.2 billion. This latest allocation is part of its broader strategy to diversify its holdings and achieve long-term growth objectives.
The investment was made to Artemis Real Estate Partners, a well-established investment manager. The specific vehicle is the Artemis Real Estate Partners Healthcare Fund III, indicating a focused approach on a resilient and growing property sector.
Details of the Artemis Healthcare Fund III
The fund chosen by ACERA, Artemis Real Estate Partners Healthcare Fund III, has a clearly defined investment thesis. It will acquire and improve healthcare-related properties throughout the United States, a strategy known as value-add investing.
This approach typically involves purchasing properties that have potential for enhancement, such as through renovation, operational improvements, or repositioning in the market. The goal is to increase the property's value and generate higher returns for investors.
Fund Financial Targets
Artemis has set ambitious financial goals for the fund. It is targeting a 14 percent internal rate of return (IRR) for its investors. The fund also includes a 7.5 percent hurdle rate, which is a minimum return threshold that the fund must achieve before the manager can collect performance fees.
The fund officially launched in June 2025 and is structured with a 10-year term. The investment period, during which the committed capital will be actively deployed into new assets, is set for four years. This structure is common for private equity real estate funds, providing a clear timeline for both investment and divestment.
A Growing Trend Among Institutional Investors
ACERA is not the only major institution showing confidence in this specific healthcare fund. The commitment places it alongside other prominent public pension funds that have also invested.
Notable investors include the California State Teachers’ Retirement System (CalSTRS) and the Jacksonville Police and Fire Pension Fund. The participation of multiple large, sophisticated investors often signals strong market confidence in a fund manager's strategy and capabilities.
Why Healthcare Real Estate is Attractive
Institutional capital is increasingly flowing into healthcare real estate for several reasons:
- Demographic Tailwinds: An aging population in the U.S. drives sustained demand for medical facilities, from clinics to senior housing.
- Recession Resilience: Demand for healthcare services is generally non-discretionary, making it less susceptible to economic downturns compared to other sectors like retail or hospitality.
- Stable Tenancy: Medical tenants, such as hospital systems and large physician groups, often sign long-term leases, providing predictable cash flow.
This trend suggests that pension funds and other long-term investors view the healthcare sector as a source of stable, risk-adjusted returns that can help them meet their future obligations to pensioners.
ACERA's Portfolio Allocation Strategy
This $35 million commitment is also significant in the context of ACERA's overall asset allocation plan. The pension fund currently has 6.7 percent of its portfolio invested in private real estate.
However, its official target for the asset class is 8.2 percent. This means ACERA is currently underweight in private real estate by 1.5 percentage points. This new investment helps to close that gap, bringing the pension fund closer to its desired portfolio balance.
Pension funds set target allocations to ensure proper diversification and to manage risk across their entire portfolio. Being under-allocated in an asset class means the fund may be missing out on potential returns or diversification benefits. By making commitments like this one to the Artemis fund, ACERA's investment team is actively working to align its actual holdings with its long-term strategic targets.
The move into a specialized sector like healthcare also demonstrates a sophisticated approach, targeting niche areas of the market that may offer superior growth potential compared to more traditional real estate sectors like office or retail.
