UNITED STATES - RREEF has lost the contract to manage California Public Employees Retirement System's CalWest Industrial Investors LLC separate account following the departure of several key officials earlier this year.
CalWest was always been managed by RREEF until now, but the pension fund has become concerned about the capability of the manager with all of the senior executives that have left the company over the past several months, including managing partner Steve Steppe, who left the firm in July.
CalWest is one of the largest separate account relationships on a single-property type in the United States, having been in existence since April 1998 and now with a net asset value of $473.2m to June 2007.
The expectation now, however, is whoever wins the mandate will be managing a $2bn (€1.4bn) account as the pension fund's long-term strategy now is to create fewer but larger separate account relationships going forward.
CalPERS has yet to decide how quickly it will appoint a new manager to replace RREEF but it could take up to 18 months should the pension fund conduct the search through a formal RFP.
One alternative being considered is to ‘fast track' certain managers for interviews, to speed up the decision process.
That said, the number of managers with the capability to manage the CalWest account is thought to be limited because any manager selected would need the wherewithal to invest in industrial properties all over the world.
At present, CalWest only invests in the United States and Canada but the pension fund has made clear in recent months it is looking to place more capital in international markets such as Europe and Asia.
Real estate managers said to have the expertise to invest in this strategy would include ING Clarion Partners, CB Richard Ellis Investors, AMB Property Corporation, ProLogis and Heitman.
CalWest has an investment strategy of either buying existing industrial properties or investing equity in new development projects and has a history of completing deals on individual assets or buying entire portfolios.
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