CalPERS Plans to Sell Out of Its Legacy Commingled Fund Portfolio

CalPERS, California Public Employees Retirement System, Park Hill Group, Starwood Capital, Rockpoint Real Estate, disposition

CalPERS, California Public Employees Retirement System, Park Hill Group, Starwood Capital, Rockpoint Real Estate, disposition

By Jon Peterson

California Public Employees Retirement System is planning to sell its limited partnership interests that it currently holds in commingled funds that are part of its legacy portfolio.

“The sale will be everything in the legacy portfolio, except for the commingled funds that involved making investments in housing,” wrote Joe DeAnda, information officer II for CalPERS in an e-mail.

[contextly_sidebar id=”W6Q7bUmZwfmXl2zYKw7VrNqVYGf95kmc”]The process for the sale has just started. “To be clear—we are marketing assets for sale. No deal has been done, [and] no assets have been identified,” wrote DeAnda in an e-mail.

The interests in the commingled funds will be sold on the secondary market, and New York City-based Park Hill Group, which has a local regional office in San Francisco at 101 California Street, has been hired to assist CalPERS in the sales effort. This company did not respond to phone calls seeking comment for this story.

The commingled fund interests held by CalPERS has invested in real estate around the United States and on an international basis. Some of the commingled funds are investing in a specific property type, such as hotels. The pension fund has placed a market value on its investment in Starwood Capital Hospitality Fund II Global, for instance, at $310 million, as of the end of 2014.

Some other commingled funds are investing in multiple property asset types. Probably the best examples of this would be Rockpoint Real Estate Fund II and III. CalPERS has placed a market value on its investment in both funds at $63million.

CalPERS has been known as an investor placing capital in major markets in the U.S. and internationally. In the U.S. the pension fund has traditionally invested in various property asset types across California, but also more broadly across the West Coast in markets like Seattle. Internationally, CalPERS had made investments across Europe and the Asian subcontinent.

The potential sale of the limited partnership interests is the first move by the pension fund to have fewer real estate managers in its real estate portfolio going forward. The end result would be to have larger and more strategic relationships.

The plan for the pension fund is to take the proceeds from the sale and keep them in real estate. “The proceeds will be re-invested in the asset class per the asset allocation targets,” stated DeAnda in an e-mail. CalPERS has an interim strategic target to invest 10 percent of its assets in real estate. The value of its existing real estate portfolio is $25.5 billion.

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