CalPERS to Beef up West Coast Apartment Portfolio with Two New Commitments Totaling $732MM

California Public Employees Retirement System, CalPERS, Pacific Urban, Pacific Multifamily Investors, Institutional Core Multifamily Investors, Invesco Real Estate, San Francisco, Bay Area, Seattle, Portland, Los Angeles, Ventura, Orange
Photo by Who’s Denilo ? on Unsplash

By Jon Peterson

As interest in West Coast housing properties continues, institutional-grade investors are looking for ways to increase their footprint across the coastal region. In light of that, California Public Employees Retirement System has approved two new commitments to apartment investment partnerships totaling $732 million, according to information stated by the pension fund in a board meeting document. Both of these relationships are very active on the West Coast.

CalPERS declined to comment beyond what was stated in the board meeting document.

The larger of the two commitments was for $469 million, which will be allocated into the Pacific Multifamily Investors LLC, a relationship that is managed by Palo Alto-based Pacific Urban. This manager did not respond to an email seeking comment for this story.

The pension fund had placed a value on the existing portfolio for Pacific Multifamily Investors at $1.6 billion through the end of June last year, according to information provided by the pension fund. The net returns on this portfolio were 10.1 percent over a five-year period, 9.8 percent for three years and 7.1 percent return over one year.

Pacific Urban looks to invest capital in many markets including several on the West Coast, according to its website. Areas where the company is active include the San Francisco Bay Area, Seattle/Portland and in three counties in Southern California – Los Angeles, Ventura and Orange.

The relationship with CalPERS is one that calls for it to invest in core vintage assets only. There is a requirement that all properties in the partnership need to be at least 11 years old. Only existing properties will be acquired for the partnership.

The other apartment commitment issued by CalPERS was for $263 million, which will go into the Institutional Core Multifamily Investors partnership, as written by CalPERS in a board meeting document. The manager of this separate account relationship is Atlanta-based Invesco Real Estate. This manager declined to comment when contacted for this story.

This partnership has an investment strategy focused on core apartments in the largest apartment markets in the western United States. This would include the San Francisco Bay Area, Southern California, Seattle and Portland.

CalPERS stated in a board meeting document that the first allocation for this relationship was stated in 2013. The pension fund has placed a value on the assets in this portfolio at $6 billion.

These two commitments by the pension fall in line with its major investment strategy for real estate. This is to have up to 75 percent of its real estate portfolio invested with income producing assets in the four main property types of office, industrial, retail and apartments. The structure of these investments is mostly through separate account partnerships.

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