REAL ESTATE - The California Public Employees Retirement System will be undertaking an overall review of its real estate portfolio and strategy over the next few months.
The pension fund discussed this move at its March 12 board meeting.
CalPERS believes that now is a good time to be doing this, as it has seen a great deal of growth in the real estate portfolio over the past several years.
At the end of last year, it hired Ted Eliopoulos as its senior investment officer for real estate. This could be the time for him to put his stamp on the future strategy of the fund.
The timetable is for the real estate investment staff to come up with a new investment plan for review and adoption by August. The first part of the process should be completed in April, following a meeting of the key real estate investment partners.
The investment council of CalPERS at this point will receive the first part of the review. Among the points to be considered will be how the pension fund has had its portfolio structured in the past and what it looks like currently.
In June, CalPERS wants to set up annual conferences or roundtable discussions with a number of the key core and non-core investment partners. The core managers would include players like REEEF, BlackRock Realty and Hines, while the non-core managers would be firms such as MacFarlane Partners.
These firms will provide the pension fund with feedback on the ideas being discussed for a future investment strategy.
CalPERS will be looking at a variety of ideas, including the best places to invest on a risk adjusted basis, given current pricing levels;, which are the best investment strategies to pursue in the US and abroad and how CalPERS take advantage of its size in the market.
The pension fund does not make shifts in its real estate strategy at all frequently. The last strategic real estate portfolio review was conducted in 1995.
CalPERS has really increased its non-core investing since 2000, when non-core made up 24.5% of the real estate portfolio. These non-core investments, which also includes REIT investments, has increased to around 47% by the year 2006.
CalPERS now has total assets of around $230bn (€174.3bn). Its real estate portfolio has a current value of $17.3bn, amounting to 7.7% of its total assets have been invested in the asset class. The targeted allocation for real estate is 8%.