CalPERS to sell $3bn RE portfolio to Blackstone – updated

The transaction marks the largest real estate secondary sale to date.

Blackstone's Strategic Partners Fund Solutions has signed a definitive purchase and sale agreement to buy the California Public Employees’ Retirement System’s $3 billion portfolio of real estate fund stakes, according to a Blackstone statement.

More than 10 co-investors, including public pension funds and sovereign wealth funds, joined in with Strategic Partners in the purchase, a source familiar with the matter told PERE sister publication Secondaries Investor.

Strategic Partners raised co-investment money from those institutions while executing on the transaction in only a matter of months, according to the source. The transaction marks the largest secondaries transaction to date.

The portfolio is made up of 43 international and domestic funds from CalPERS's non-strategic, legacy real estate portfolio. It comprises more than 350 underlying fund interests, the source said, adding that the funds are predominantly based in the US, with a significant exposure to European funds as well, and a small exposure to emerging market funds. CalPERS's legacy portfolio had exposure to more than 70 fund interests, as of 30 June, according to documents from the pension fund.

Pricing and terms of the transaction were not disclosed.

“Strategic Partners’ relationships with global investors and real estate managers, coupled with a long history of executing secondary transactions on a fair, timely and confidential basis, enable us to transact on a variety of unique opportunities,” said Verdun Perry, co-head of Strategic Partners in the statement. “We are pleased to partner with CalPERS to address their portfolio management needs.”

“This sale allows CalPERS to focus on our strategic plan and on investing in assets and managers that better align with our real estate goals,” said Paul Mouchakkaa, CalPERS' managing investment director for real assets, in another statement issued by the pension fund. “It also represents the continued effort to reduce complexity across the CalPERS fund.”

The CalPERS real estate program currently holds about $27.1 billion in commercial, industrial, and residential assets.

Park Hill, which recently spun out of Blackstone, advised CalPERS on the transaction.