CalPERS Weighs 13M-SF Retail Portfolio Sale

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SAN FRANCISCO-First Washington Realty, advisor to CalPERS on its 12.7-million-sf of nationwide shopping center assets, is considering the sale of an interest in or the whole of the 97-property, estimated $2.8-billion portfolio. First Washington Realty chairman Stuart Halpert tells GlobeSt.com that while it is always considering its options, “recently we made more formal our interest in considering the possibility of a sale of an interest in or the whole of the portfolio.”The portfolio, considered one of the best in the nation, was created when CalPERS acquired the mostly mid-Atlantic assets of publicly traded First Washington Realty Trust and combined them with its existing retail portfolio in the Western US, says Halpert, who was the chief executive of the REIT when it was dissolved as a result of the purchase. “Those of us who were involved as principals [of First Washington Realty Trust] simply turned around and incorporated privately,” says Halpert. “We were given the portfolio management assignment, which eventually developed into us being an advisor for them nationally.”Since CalPERS’ acquisition of First Washington Realty Trust in 2001, Halpert says the portfolio has been selectively trimmed and fattened, with over $300 million of assets sold and an equal amount added. As for the current state of the real estate market, Halpert says it has attracted an “enormous” amount of institutional capital interest as investors seek alternatives to low yielding interest rates and relatively flatter stock market performance. “That has had the effect of reducing cap rates on real estate, which have made it into an attractive and sought after investment asset,” he says. “As a result, the pricing is higher than it has historically been.”"But that doesn’t mean we are committed to selling,” says Halpert, adding that he is “not in a position to comment specifically about any negotiations at this time.”