CalPERS' $9.5 billion real estate portfolio returned a record high of 40.8% net of fees for the fiscal year ended June 30, despite the four-year downward trend in real estate returns, according to a staff report. In comparison, the NCREIF Property index returned 18% over the same time period. The year before, CalPERS' real estate portfolio earned 13%, said Brad Pacheco, spokesman for the $193.3 billion California Public Employees' Retirement System, Sacramento. Much of the return is due to the sales of core portfolio assets, he said.
Separately, CalPERS committed $180 million to Newbridge Asia IV, a $1.5 billion fund that will make controlling investments in financial services, health care and consumer companies across Asia. It also committed $60 million to Carlyle/Riverstone Renewable Energy Infrastructure Fund I, a $300 million joint venture between The Carlyle Group and Riverstone Holdings that invests in power generation companies using renewable resources, and $50 million to OCM Opportunities Fund VI, a $1.77 billion distressed debt fund. In real estate, CalPERS committed $100 million to Hollywood Park, a redevelopment project, and $50 million to Stockbridge Fund II, an opportunistic mixed-use fund.
CalPERS staff also recommended an exemption from competitive bidding for its contract with International Fund Services as administrator of the fund's absolute-return program. IFS' current contract expires May 1, 2006. CalPERS staff had surveyed 10 hedge fund administrators and found IFS is the only firm providing all the services and tools needed on a single program. The CalPERS board will consider the proposal at its Nov. 14 meeting.
In addition, CalPERS plans to discuss steps to revamp its $9.6 billion alternative investment program at the board's Dec. 12 meeting. A strategic review by Pension Consulting Alliance recommended reducing the number of general partner relationships, increasing use of funds of funds and boosting the amount of co-investments it makes.