REAL ESTATE - The California Public Employees’ Retirement System (CalPERS) will short US REITs if the pension fund’s board agrees to a recommendation from its investment policy subcommittee.
In June the investment committee agreed in principle to form a partnership actively to manage US real estate equities securities. A committee document described the move as a “more defensive strategy in a perceived rich market potentially poised for a correction” because it allows short selling.
Under the new recommendation, CalPERS will revise a policy that currently has no mention of short positions to allow them “if the portfolio is externally managed and if…the external manager has the requisite expertise”.
Negotiations with Adelante Capital Management, the preferred external manager, are ongoing.
The decision whether to allow shorting of US REITS depends on ratification by the board.
“The dust won't settle on this until the investment committee – comprised of all 13 CalPERS board members – signs off on it, and the completion of the transaction that's still being negotiated with Adelante,” said CalPERS spokesman Clark McKinley.
In a separate move, CalPERS is scouting one or more fund managers to manage global REITS. It has a global commitment of $25–$50 per manager, with a total commitment of $1bn for the global REIT manager pool.