CalPERS to buy stake in Russian mall

America’s largest pension plan has agreed to acquire an interest in the Metropolis shopping center in Moscow, three months after Morgan Stanley acquired the property in the largest-ever commercial real estate deal in Russia.

The California Public Employees' Retirement System (CalPERS) plans to purchase a minority stake in the Metropolis Shopping and Entertainment Mall, a 205,000-square-meter (2.69 million-square-foot) shopping center in Moscow, from Morgan Stanley Real Estate Investing (MSREI), the real estate investment management arm of Morgan Stanley, according to Russian media reports. The $257.6 billion pension plan will make the acquisition through Hines CalPERS Russia Long Term Hold, a real estate separate account with Houston-based real estate firm Hines. Terms of the transaction were not disclosed.

Both Morgan Stanley and CalPERS declined to comment on the deal, and Hines could not be reached at press time. However, CalPERS committed $250 million to the vehicle in March, according to documents from its investment committee meeting last week. 

The proposed investment will be part of the implementation of CalPERS’ 2011 strategic plan, under which the pension plan intends to allocate a small portion of its real estate portfolio to the acquisition of stabilized or core-like assets in the major cities of certain higher-growth emerging markets.  Such investments would be executed through a separate account format in a long-term partnership with an investment manager, which also would make a co-investment in the vehicle.

CalPERS is buying the interest in Metropolis Shopping and Entertainment Mall, which is part of the 311,000-square-meter mixed-used complex Metropolis, just three months after MSREI acquired the property from Capital Partners, a real estate developer with offices in Kazakhstan, Russia and Turkey. In an announcement made in February, MSREI touted the transaction as the largest-ever in Russian commercial real estate. Terms of that deal were not disclosed, but data provider Real Capital Analytics said the asset traded for approximately $1.2 billion.