ALTERNATIVES

CalPERS, Bentall Kennedy partner to invest in industrial real estate

California Public Employees' Retirement System is hunting for industrial properties, forming its own corporation, Institutional Logistics Partners, and making an initial $250 million investment to buy core properties in large U.S. markets, Joe DeAnda, a spokesman for the $254.9 billion Sacramento-based pension fund, confirmed Tuesday.

Over a four- to five-year period, CalPERS could invest up to $3 billion in the industrial properties, said Michael McKee, CEO of Bentall Kennedy U.S.U.S. in an interview. The firm has entered into a strategic partnership with the retirement system to buy the industrial properties. CalPERS own a one-third interest in Bentall Kennedy.

The partnership is part of CalPERS' revised real estate philosophy that is aimed at concentrating on core income-producing real estate assets. The revised policy was put in effect in 2011 following massive real estate losses during the recession.

Under the partnership, CalPERS will invest 99.5% of the money with Bentall Kennedy making a 0.5% commitment.

The partnership closed on its first investment about a week ago. It purchased Northgate, a 1 million-square-foot industrial warehouse facility in Riverside, Calif., for $69 million from KTR Capital Partners.