GLOBAL - The value of the California Public Employees Retirement System's real estate portfolio to the end of June has increased by $171m (€125m), or 1.1%, from the previous quarter and by more than $1.8bn (13.5%) year on year.

The total net asset value of the portfolio now stands at approximately $15.2bn.

The pension fund attributed the increase to a combination of contributions for existing commitments, new commitments and net paydowns.

The only new commitment made to real estate was a $190m commitment made to Hines CalPERS Brazil Fund II.

The net paydowns involve the pension fund's to pay off debt incurred from real estate bubble deals invested at the peak of the market. So far, the fund has been able to get the amount of debt under the real estate policy ceiling of 60%.

CalPERS said it knew it was not out of the woods yet, as its total real estate portfolio remained under pressure.

It said its portfolio continued to suffer from the market downturn and could fall further in value.

The CalPERS total real estate portfolio underperformed the policy benchmark for all periods under consideration as at 30 June. 

High levels of leverage, greater proportion of non-stabilised, non-income producing assets and vintage year concentration are the primary causes for underperformance relative to the policy benchmark.

After fees, the real estate portfolio lost 12.2% over the last 12 months.

There was a total of $200m of new capital to be allocated for Brazil Fund II, with CalPERS putting in $190m and Hines $10m.

The investment strategy for the new capital will be focused on industrial distribution and logistic centres and the development of affordable housing projects.

Markets to be considered will include Sao Paulo, Rio de Janeiro, Curitiba and Manaus.

CalPERS said it still had some capital left to invest from the original commitment to Brazil Fund II. 

Of the $285m committed to the fund in 2007, only $147m has been invested at this time.


 

Topics