CalPERS Makes Real Estate Play

CalPERS has bought a third of real estate investment advisor Bentall Kennedy for $100 million.

(June 27, 2012) — The California Public Employees’ Retirement System (CalPERS) has purchased a third of real estate investment advisor Bentall Kennedy for $100 million.

The deal comes on the heels of the California State Teachers’ Retirement System (CalSTRS) decision to acquire a 90% stake in LCOR, a real estate investment, management, and development company, for $800 million. At Bentall Kennedy, CalPERS will join the $91 billion British Columbia Investment Management Corporation, which also owns a 33% interest. CalPERS purchased its stake from Ivanhoé Cambridge, the real estate subsidiary of Caisse de dépôt et placement du Québec, another public pension.

“Bentall Kennedy has a track record of fiduciary excellence and is a global leader in environmental, social and governance practices,” said Rob Feckner, president of the CalPERS Board of Administration. “This relationship will allow our real estate team to further expand on trends and opportunities in real estate investment and management.”

For CalPERS, the transaction reflects the $228 billion fund’s decision last year to reorient its stance toward real estate investments. The fund had been overweight real estate in the 2000s, and its real estate holdings walloped the plan when they plunged 47.5% in 2009. Last August, CalPERS decided to drop its allocation to real estate, albeit temporarily, from 10% to 8%. The fund pledged to focus on high-demand core, cash-generating properties.

«