CalPERS to Transfer Portfolio Management

It's not a done deal yet, but the California Public Employees' Retirement System recently announced plans to take management responsibilities for its $570 million CalSmart mixed-use real estate portfolio from RREEF and give it to Canyon Capital Realty Advisors L.L.C. The potential reallocation is part of the public pension fund's ongoing real estate restructuring strategy.

April 6, 2011
By Barbra Murray, Contributing Editor

Courtesy Flickr Creative Commons user Sarah_Ackerman

It’s not a done deal yet, but the California Public Employees’ Retirement System recently announced plans to take management responsibilities for its $570 million CalSmart mixed-use real estate portfolio from RREEF and give it to Canyon Capital Realty Advisors L.L.C. The potential reallocation is part of the public pension fund’s ongoing real estate restructuring strategy.

The CalSmart group of properties encompasses 11 office, industrial and apartment assets located in Northern and Southern California, as well as Chicago and Florida. The anticipated handing over of the reins to Canyon Capital marks another step in CalPERS’ real estate restructuring endeavor, which involves the transferring of management duties to entities that were more successful than other CalPERS portfolio managers were during the collapse of the real estate. “We have confidence in Canyon and expect excellent management of the CalSmart portfolio,” said Ted Eliopoulos, the senior investment officer who supervises CalPERS’ global real estate investments.

However, RREEF, the real estate investment management business of Deutsche Bank’s Asset Management division, will not be stripped of all of its management commitments. The company will continue to oversee the pension fund’s CalWest Industrial Properties investment portfolio, which it has managed since 1998, as well as the CalEast Global Logistics industrial real estate portfolio, the management of which RREEF and GI Partners took over from LaSalle Investment Management in December 2010.

Additional moves made as part of the strategic realignment of CalPERS’ real estate holdings include the transfer of the 5.2 million square-foot National Office Partners portfolio, valued at $724 million, from Hines to CommonWealth Partners in January. And in October of last year, the pension fund transferred management responsibilities for its Western Multifamily L.L.C. portfolio from BlackRock Realty Advisors to GID Investment Advisers L.L.C.

At the close of 2010, the CalPERS’ total real estate portfolio was valued at $16.6 billion, including $4.5 billion of assets located in California.