April 10, 2006 Press Release
The California Public Employees’ Retirement System (CalPERS) today announced [4/10/06]it has invested $100 million in The Towers [in Sacramento]– twin hotel and condominium skyscrapers planned at Third Street and Capitol Mall by local developer John Saca.
The Towers investment will be part of CalPERS $9.3 billion real estate portfolio that includes investments in office, retail, apartment, and industrial buildings, housing, and international real estate funds. Real estate investments were the highest earning asset class for CalPERS last year, earning the System investment returns near 40 percent.
“The long-term growth prospects for the city and real estate development look good,” said Mike McCook, Senior Investment Officer for the pension fund’s real estate portfolio. ”
July 25 Press Release
CalPERS real estate portfolio* was the biggest percentage gainer among asset classes, returning 38.4 percent for its investments in office, retail, apartment, and industrial assets, and 36.5 percent for housing, land, and California urban real estate investments. By comparison, the NCREIF industry benchmark earned 20.2 percent.
END PRESS RELEASE
This seems like it has worked out very well for them, and a 4.5% asset allocation to real estate seems reasonable. I bet next year they will not get that 38.4% return though.
Real estate seems like the “in” investment for pension funds. Will these porfolio managers get out at the top, or ride the wave down? What will that do to their returns?
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