NORTH AMERICA - The California Public Employees Retirement System has selected Canyon Capital Realty Advisors to oversee its $200m (€155m) emerging manager programme for real estate.
This programme will be limited to real estate managers that have less than $1bn of assets under management and no more than three prior commingled funds or separate account investment vehicles.
Joe Dear, CIO at CalPERS, said: “Achieving appropriate risk-adjusted earnings must always be our primary objective. But we also hope this programme will lead us to make investment opportunities in California and increase diversity among our pool of real estate investment managers.”
Canyon Capital was one of four real estate managers considered for the mandate.
Ted Eliopoulos, senior investment officer for the CalPERS real estate programme, said:
“Canyon’s extensive experience and proven track record in urban investing make them a great fit to lead this programme.”
CalPERS is planning on having as many as six managers in the initial $200m of equity committed to the programme.
The commitments to each manager will range between $30m to $60mof equity.
The investment strategy for the emerging manager programme will be in real estate assets in urban markets in California.
This would include places such as the San Francisco Bay Area and Los Angeles, although there will be flexibility for the managers from a property type perspective.
Canyon Capital will have investment discretion on which managers are chosen, which means it can pick a manager and make a final decision without first needing approval from CalPERS.
The pension fund made the decision in August 2011 to approve the emerging manager idea for real estate, which will run for five years.
CalPERS’ investment staff will provide an annual progress report to the investment committee of the pension fund.
Upon completion of the programme, the investment staff will evaluate the outcome and consider the feasibility of a second phase.
CalPERS did have an existing relationship with Canyon Capital before the formation of the emerging manager programme.
This was through two private strategies: the $128m Canyon Johnson Urban Fund III and the $38.6m CalSmart partnership.