CalPERS earmarks $6.3 billion to RE

The largest US pension plan’s new fiscal-year allocation to real estate includes commitments to managers such CommonWealth Partners and ARA Asset Management.

The California Public Employees’ Retirement System (CalPERS) plans to invest $6.33 billion in funds and joint ventures with approximately a dozen existing real estate managers during the its new fiscal year, which began in July. The planned commitments were part of the $301 billion pension system’s annual investment plan and disclosed in documents from its investment committee meeting Tuesday.

Among the largest expected allocations for fiscal year 2015-2016 was $1.67 billion to Fifth Street Properties (FSP), a partnership with Los Angeles’ CommonWealth Partners that targets core, core-plus and value-added acquisitions and development in large-scale office and mixed-use properties throughout the US. CommonWealth also is the real estate manager for National Office Partners, an office-focused joint venture with CalPERS that is due to receive an additional $101 million.

Another major recipient will be Institutional Multifamily Partners, a co-investment joint venture with GID Investment Funds, which is expected to be granted $992 million. The partnership, which was formed in 2010, targets multifamily acquisition and development opportunities throughout the US.

Meanwhile, CalPERS is due to dole out $750 million to Institutional Mall Investors (IMI), a core-oriented, co-investment venture with Miller Capital Advisory focusing on market-dominant regional and superregional shopping centers in the US.

Menlo Park, California-based private equity firm GI Partners stands to receive a total of $633.56 million for two existing joint ventures, TechCore and CalEast Solstice. The new fiscal year investment plan calls for TechCore, a technology-focused core real estate fund that was launched in 2012 with a $500 million commitment from CalPERS, to be granted an additional $181.56 million, and for CalEast Solstice, an industrial-focused partnership, to receive a follow-on pledge of $452 million. CalPERS also plans to invest a total of $32.78 million to two other programs with GI Partners, CalEast Canada Limited Partnership and CalEast Industrial Investors.

The pension plan also is anticipated to pledge $400 million in a follow-on commitment to Institutional Logistics Partners, a partnership with Bentall Kennedy to buy stabilized, core industrial properties in major US markets, primarily coastal markets. The partnership, which was established with an initial commitment of $250 million in 2013, also was bestowed with a $600 million commitment from CalPERS last year.

Additionally, $391 million has been designated to Pacific Multifamily Investors, a joint venture with Palo Alto, California-based Pacific Urban Residential to invest in Class B multifamily assets in the western US. One of CalPERS’ newest partnerships, Pacific Multifamily Investors was created in January with an initial allocation of $214.50 million.

Global Retail Investors, a joint venture with Bethesda, Maryland-based real estate investment company First Washington Realty, also is expected to receive a $390 million commitment. Since 2005, CalPERS and First Washington have jointly acquired and operated neighborhood and community shopping centers in the US and abroad through the partnership.

In other substantial commitments, CalPERS is due to pledge $300 million to ARA Asset Management’s ARA Long Term Hold Fund. The pension system previously invested $480 million in the vehicle in 2012.

Meanwhile, both Institutional Core Multifamily Investors, a partnership with Invesco Real Estate to invest in core apartment properties in the West and Midwest regions of the US, as well as Canyon Partners Real Estate’s emerging manager fund, Canyon Catalyst Fund, are anticipated to be allocated $100 million each.

The pension plan’s aggregate real estate allocations for fiscal year 2015-16 represent one of its largest annual allocations to the asset class. The planned commitments fall just shy of CalPERS’ allocation to the asset class in its last fiscal year, which totaled $6.6 billion.