CalPERS latest investments in real estate assets used moderate leverage

CalPERS latest investments include a $30 million real estate project with firm CIM. That project, an office block in downtown Sacramento, remains in limbo.

CalPERS last week scrapped its contract with CIM.

The Sacramento office project

CalPERS had tied up with CIM to construct a 34-story office tower in downtown Sacramento. The pension fund had paid $ 30 million to CIM since January 2018. CalPERS took over the project in 2008 after construction suspended in 2007. CalPERS has already lost over $ 90 million on the project which has been plagued by construction issues.

The project site is in the heart of downtown Sacramento, adjacent to the new stadium of the National Basketball League’s Sacramento Kings.

CalPERS latest investments

According to a report presented to its investment committee, the pension fund added $3 billion to its $42.1 billion real estate portfolio as of July 31, 2019.

Of the new additions, the most significant is a $ 750 million commitment to Fifth Street Partners. The latter is in a joint venture with Commonwealth Partners for investing in landmark US office buildings.

Further, an amount of $700 million has allocated to Institutional Multifamily Partners (IMP). In addition, IMP and Global Infrastructure Partners (GIP) are investing $4 billion in multi-family units.

Another $ 500 million commitment relates to real estate firm GRE, partnering with First Washington Realty. Finally, for the one year ended March 31, 2019, CalPERS earned moderate returns of 3.7% on its real estate portfolio.