CalPERS Begins Manager Cutback With $3 Billion Real Estate Sell-Off

CalPERS began the process this week of reducing its external managers by 50 percent; the pension fund is selling up to $3 billion of its real estate holdings, and intends to re-invest that money back into real estate with different managers.

Many of the pension fund’s largest real estate managers – Starwood Capital, CBRE Global Investors and BlackRock – could be on the chopping block as CalPERS looks to allocate more funds to smaller, emerging managers.

More from IPE Real Estate:

The California Public Employees’ Retirement System (CalPERS) is selling what could amount to $3bn (€2.7bn) of real estate fund holdings as it embarks on a portfolio-wide manager reduction programme.

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“The sale of these assets represents the continued effort to reduce costs, risk and complexity across the CalPERS fund,” said Paul Mouchakkaa, CalPERS senior investment officer for real assets.

A CalPERS spokesman told IP Real Estate that the objective is to sell “everything in the legacy portfolio,” excluding housing. The proceeds will be reinvested in real estate.

The total amount for sale could vary based on market conditions and what the real estate market can absorb. The spokesman said CalPERS is “open to selling [the legacy portfolio] whole or in pieces”.

The CalPERS legacy property portfolio includes 80 funds with a value of $6.16bn, as of September last year, according to the CIO Performance Report for December 31, 2014.

Park Hill Group is helping CalPERS with the sell-off.

Photo by  rocor via Flickr CC License