CalPERS Leads Record Year for Unloading Real Estate

The secondaries market has never been so hot.

Sales on the secondary real estate market more than doubled in 2015 versus the year prior, according to data from specialty firm Landmark Partners. 

The California Public Employees’ Retirement System (CalPERS) offloaded an industry-leading $3 billion property package in November, contributing to US public pensions’ 63% share of all transactions by volume. 

“Institutional investors have become more comfortable with the market’s ability to absorb large portfolio transactions.” “This demonstrates large institutional investors’ increased confidence in using the secondary market as a portfolio management tool,” Landmark stated in its report. “Pension funds continued to rebalance portfolios and reduce the number of non-core sponsor relationships in order to meet administrative and portfolio management objectives. Institutional investors have become more comfortable with the market’s ability to absorb large portfolio transactions.” 

CalPERS fit squarely into that group. The $300 billion retirement system put assets on the block in June as part of a portfolio-wide “effort to reduce costs, risk, and complexity,” CalPERS’ real estate chief said at the time. 

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Blackstone’s secondaries unit purchased the entire $3 billion package in November. 

Endowments and foundations followed public funds as 2015’s second-most active sellers, although hardly more active than in the year prior. Transaction value climbed from $1 billion across 11 deals to $1.1 billion over 13, according to Landmark. 

But those figures may not account fully for non-profits’ real estate deal flow. The dataset does not include all trades between limited partners—a private endowment to a family office, for example—which Landmark described as “naturally discreet and typically not publicly disseminated.” 

Real Estate Secondaries 2015Source: Landmark Partners

Related: CalPERS Unloads $3B in Real EstateU. California’s Massive CullSac. County, Pantheon Partner on Secondaries