Blackstone acquires €2.8b of Calpers' non-strategic real estate

Blackstone has acquired $3 bn (€2.8 bn) of global real estate fund interests from California Public Employees’ Retirement System (Calpers) in what is described as the 'largest secondary transaction to date'.

Strategic Partners Fund Solutions, Blackstone’s secondary and private market fund solutions business, is taking over the interests in 43 international and domestic funds that Calpers, the largest US retirement fund, began marketing during the summer.

At the time Calpers had $25.5 bn in commercial property assets out of a total investment portfolio of about $300 bn. The retirement fund instructed Park Hill Group to find a buyer for the non-strategic real estate portfolio by the end of 2015. Blacktone - known for its ability to move fast - has allowed Calpers to meet that deadline with weeks to spare.

The transaction is a major plank of Calper's ongoing strategy to slash the number of external managers it uses across its entire investment portfolio in order 'reduce costs, risk and complexity'. The goal is to cut the number of managers by half to about 100.

"This sale allows Calpers to focus on our strategic plan and on investing in assets and managers that better align with our real estate goals,' said Paul Mouchakkaa, Calpers managing investment director for real assets. 'It also represents the continued effort to reduce complexity across the Calpers fund.'

Mark Burton, head of strategic partners’ real estate business, added: 'Given our significant real estate experience developed through over 100 real estate secondary transactions since 2001, and our strong coverage of the 43 funds in this transaction, we were able to execute a complex transaction in a relatively short amount of time.'

Another major example of Blackstone taking real estate off the hands of a major institutional player occurred last April. Blackstone and banking group Wells Fargo clinched one of the largest global real estate deals since the 2008 crisis by acquiring most of the assets of GE's real estate property and loans business for about $23 bn. As part of the deal, Blackstone’s European real estate fund, BREP Europe IV, purchased GE's European equity real estate assets for €1.9 bn.