California Public Employees’ Retirement System (CalPERS) is expanding its emerging managers real estate strategy to new markets and property types.
The pension fund said it had allocated an additional $350m (€301m) to the Canyon Catalyst Fund (CCF), its real estate emerging manager programme.
Since 2012, CalPERS has allocated $1.2bn to CCF and it has to date invested exclusively in Californian urban markets and in office, industrial, retail, apartment and mixed-use property.
CCF, which is managed by Canyon Partners Real Estate, will now be able to invest in markets such as Phoenix, Portland and Seattle and will add new property types such as self-storage and student housing.
Maria Stamolis, co-head of real estate investments at Canyon Partners, said: “The expansion of our targeted markets is a natural extension of our investment strategy as we continue to scale the emerging manager platform and support the growth of our current managers.
“We also believe that there are attractive opportunities in self-storage and student housing due to broad demographic trends.”
CalPERS and Canyon Partners are planning to bring in more managers to the platform. The most recent addition was BKM Capital Partners, which invests in industrial properties. The other existing managers are Paragon Commercial Group, Pacshore Partners, Rubicon Point Partners and Sack Properties.
“We have maintained a disciplined and methodical approach to the selection of partners and investments over the past five years,” Stamolis said.
“We have the discretion to add managers and we will determine the number of selections by assessing the needs of the portfolio and market opportunities.
“We continue to maintain active outreach in the emerging manager marketplace to track and identify emerging manager candidates.”
CCF has realised 16 investments, in each case beating its target returns.
“We maintain the discretion to allocate capital to our managers, and our goal will be to continue to meet or exceed our mandated returns while expanding the opportunity set of investments for the Catalyst Fund,” said Stamolis.