Board replaces Barings with LaSalle after interviews of three core real‑estate finalists

The Mendocino County Board of Retirement voted Sept. 16, 2025, to replace incumbent manager Barings with LaSalle Investment Management for the county’s core real‑estate allocation after hearing hour‑long presentations from three finalists and analysis from consultant Callan.

The decision followed presentations from Barings (incumbent), Principal Real Estate Investors and LaSalle Investment Management, and a discussion led by the county’s consultant, Callan. Callan told trustees the search was intended to find a core manager to complement the county’s existing DWS allocation and to consider a future core‑plus sleeve; Callan highlighted fund size, sector weights and manager mix as the chief decision points.

Why it matters: The board’s change replaces a long‑standing incumbent and reshapes the county’s real‑estate exposure. Trustees and consultants emphasized two linked concerns: Barings’ relatively small fund size and a sizable redemption/contribution queue that could constrain new acquisitions, and personnel turnover on the incumbent team — factors that, in the board’s view, pose execution and liquidity risk if market conditions shift.

What speakers said

- Chris Berry, portfolio manager at Barings, reviewed the incumbent fund’s repositioning since 2023, recent acquisitions (including Artemis Real Estate Partners), portfolio composition and performance. Berry told the board the fund had reduced office exposure, increased residential and industrial weightings, and expected income growth in the next four years; he also said Barings had made progress on an outstanding redemption queue and invited Mendocino County to serve on the fund advisory committee.

- Darren Clice and James Lang of Principal described a broadly diversified core strategy tied closely to industry benchmarks, highlighted Principals’ long tenure in core real estate, and said the firm had managed contribution/redemption timing conservatively during the market dislocation (they noted Principal had paused marketing during the 2022–2023 period and had since resumed calls for capital).

- Chadwick Cunningham, Jim Garvey and Pat Pelling of LaSalle presented LaSalle Property Fund’s 15‑year track record, its relative underweight to traditional office, and its meaningful exposure to alternative sectors the trustees asked about — medical office, life sciences and self‑storage — which the LaSalle team said had supported income performance during the downturn.

- Aaron and Claire (Callan) presented side‑by‑side portfolio overlays to show how each finalist would pair with the county’s existing DWS allocation. Callan summarized tradeoffs: all combinations produced a modest industrial overweight and slightly lower multifamily weight versus the index; Principal’s portfolio was more closely benchmarked to the Odyssey index, while LaSalle offered a larger alternatives exposure that the consultants said could reduce correlation and add diversification if combined thoughtfully with any core‑plus allocation the board later considers.

Board discussion and vote

Trustees asked about liquidity, the size of manager queues and how each manager sources and stabilizes income. After discussion, a trustee moved that the board replace Barings with LaSalle; the motion was seconded and passed in roll call. The board then directed staff to work with Callan to execute transition steps and to proceed with the planned core‑plus manager interviews at the next meeting.

Votes at a glance

- Core manager selection: Motion to replace Barings with LaSalle Investment Management — approved (tally: yes 6, no 0, abstain 0; two trustees absent). The board recorded the motion as approved and directed staff to implement transition steps.

Nut graf — how this changes county exposure

The swap reduces reliance on a relatively small incumbent fund that the board and consultant identified as having a larger redemption queue and adds a larger, more diversified manager with a heavier allocation to medical office and life sciences — sectors the board’s consultant flagged as providing durable income and diversification. The board preserved the option to add a core‑plus sleeve in a follow‑on search to gain other alternative sector exposure if desired.

Background and supporting details

- Why Barings was under review: Callan told the board the county was reviewing Barings because of (a) performance that required review during the firm’s repositioning, (b) personnel changes on the Barings team (the departure of a co‑portfolio manager), and (c) the practical risk of a smaller fund with a sizable redemption queue constraining new purchases or forcing sales at inopportune times.

- How the finalists differed: LaSalle emphasized a long record of outperformance versus the Odyssey benchmark, a lower allocation to traditional office and targeted exposure to medical office and life sciences. Principal emphasized broad diversification across property types and conservative capital‑management practices (including a history of pausing capital calls during market stress). Barings emphasized its repositioned portfolio, recent acquisitions and GRESB sustainability rankings.

- Next steps: Callan will prepare transition instructions, a timeline for capital movement and any legal/operational documents required; staff will present a transition plan and the board will continue the core‑plus search at the next meeting.

Ending — what trustees said going forward

Trustees who spoke during the decision said they wanted the county to keep flexibility to access core‑plus or alternatives exposure later, and they asked Callan to prioritize orderly transition mechanics and to minimize transaction costs. The board scheduled follow‑up work with Callan and the county’s consultant; trustees also asked that core‑plus finalists be invited to the next meeting so the overall allocation mix can be finalized earlier than later.