Washington commits $250m to Calzada

The $88.9 billion pension plan also expects to transfer four real estate operating companies that it currently manages internally to the newly formed intermediary.

Washington State Investment Board (WSIB) has added a new real estate partner, Calzada Capital Partners, to its investment roster.  Late last week, the pension plan approved a proposal that would involve transferring four real estate operating companies (REOCs) that its staff currently oversees directly to Calzada. Additionally, WSIB expects to commit $250 million of capital to the Chicago-based firm to invest in new real estate operating companies.

The REOCs to be transferred to Calzada include Hometown America, Corporate Properties of the Americas (CPA), PBSC Holdings and Terramar Retail Centers, which comprise a total of 20.2 percent of Washington State’s real estate portfolio as of September 30, according to the pension system’s website. 

Of that, Hometown America, a Chicago-based owner and operator of manufactured home communities, accounts for 4.7 percent; CPA, an industrial real estate company based in Monterrey, Mexico, represents 8.6 percent; PBSC, a hotel and resort operator in French Polynesia, consists of 2 percent; and Terramar, a Carlsbad, California-based retail real estate investment and development company, represents 4.9 percent. The timeframe for the transfer to Calzada will be dependent on the negotiation of final terms and conditions, a WSIB spokeswoman noted.

Calzada, based in Chicago, is led by Richard Cline and Raymond Flores, who previously have managed investments for WSIB for many years. The partnership, which was believed to have been formed in the last year, will invest in or with REOCs globally, but with a primary focus on the Americas.

The pension plan currently directly oversees 22 real estate operating companies, including the four being transferred to Calzada. However, WSIB has said it primarily invests in these entities through intermediaries because of the time- and management-intensive nature of identifying, underwriting and overseeing such investments, as well as the pension fund’s limited ability to hire a sufficient number of investment professionals in-house to manage a large global portfolio of such companies. Washington State had $88.9 billion of assets under management as of December 31, of which 12.34 percent was allocated to real estate, according to its most recent investment report.