CalPERS forms new multifamily JV

The largest US pension plan has added Pacific Urban Residential to its multifamily real estate program for a long-term joint venture with an initial allocation of $200 million.

The California Public Employees’ Retirement System (CalPERS) has added Palo Alto, California-based Pacific Urban Residential (PUR) as a new manager in its multifamily real estate program as part of a multi-year venture with an initial allocation of $200 million.
The partnership, named Pacific Multifamily Investors (PMI), will invest in Class B multifamily properties in the western US. The program will seek to build a “stable income-oriented portfolio of institutional-quality core apartment assets,” according to a press release from the $280 billion pension plan. 
The new venture has its first northern California transaction under contract, which is non-refundable and scheduled to close in early February.  Its first southern California transaction also is under contract.  In addition to California, PMI is targeting investments in Washington and Oregon and is evaluating other major markets in the West.
 “We are delighted and honored to partner with CalPERS, the largest pension fund in the US,” PUR chief executive Alfred Pace said in a statement. “Investments will be held for income and long-term appreciation, augmenting CalPERS’ core multifamily investment objectives. The venture is designed as a multi-year investment program with significant additional discretionary commitments on an annual basis.”
According to a statement by CalPERS’ acting chief investment officer Ted Eliopoulos, the Sacramento-based pension chose to add another partner to its multifamily real estate program in order to enhance its overall risk-return profile and bring in high-quality apartment assets. CalPERS currently holds approximately $2.5 billion in assets in its multifamily program. In April, the pension added Invesco Real Estate to the program with an initial allocation of $250 million. 
“With years of experience in the multifamily space, Pacific Urban Residential is a natural fit for our program,” Eliopoulos said in the statement. “We're excited to work with them as we identify and acquire multifamily assets with both strong returns and the potential for future appreciation.” 
Co-founded in 1998 by Pace and George Marcus, PUR has acquired and invested in 110 multifamily communities totaling approximately 20,000 units and $3 billion in consideration. The venture with CalPERS represents PUR’s first direct relationship with a pension plan.