SACRAMENTO—As part of its ongoing efforts to reorganize its portfolio, the California Public Employees' Retirement System announced plans to sell as much as $3 billion of its real estate investment holdings. The pension fund has tapped Park Hill Group to assist in the deal, which would be the largest offering ever on the real estate secondaries market.
While the $3-billion figure is huge, it's just a drop in the bucket for CalPERS, a $300-billion pension plan that serves more than 1.7 million members. The CalPERS Real Estate Program currently holds about $25.5 billion in commercial, industrial and residential assets.
According to the company, the portfolio to be sold consists of assets that no longer align with the strategic goals of the real estate program, and includes both US and global investments.
“The sale of these assets represents the continued effort to reduce costs, risk and complexity across the CalPERS fund,” stated Paul Mouchakkaa, senior investment officer for real assets at CalPERS. “For the Real Estate Program, it will enable us to invest in assets and managers that are more aligned with our current strategy.”
Mouchakkaa himself joined CalPERS earlier this year, filling the shoes of Theodore Eliopoulos, who was promoted to CIO of the broader company. The former Morgan Stanley managing director took over the firm's real estate portfolio as it was still recovering from the effects of the mortgage meltdown and Great Recession.
The sale is the first move under a new plan that would, over the next five years, cut down the number of external investment managers in the total fund by half, to about 100 larger and more strategic relationships.
Park Hill Group has started seeking offers from interested parties in the secondary market. The deal is expected to be completed by the end of this year.
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Sule Aygoren
Aygoren oversees the editorial direction and content for ALM’s Real Estate Media Group, including Real Estate Forum and GlobeSt.com. In her tenure with ALM, she’s held roles of increasing responsibility, including Managing Editor. Aygoren has received several awards for her coverage including Best Trade Magazine Report from the National Association of Real Estate Editors and the James D. Carper Award for Young Journalists. Under her direction, Forum has received four national NAREE awards for Best Commercial Real Estate Trade Magazine.
