CalPERS committed a total of $530 million to two China real estate funds managed by ARA Asset Management, according to a news release from the $237.5 billion retirement system.
The California Public Employees' Retirement System will invest $480 million in the ARA Long Term Hold Fund and $50 million in ARA's Asia Dragon Fund II.
CalPERS in 2007 had invested $500 million in ARA Asia Dragon Fund I, according to the release, returning an annualized 19.2% for the 12 months ended March 31, and an annualized 8.4% for the three years ended March 31.
“Income growth and urbanization remain the key themes for growth in China,” said Joe Dear, CalPERS' chief investment officer, in the release. “China's office and retail sectors offer stable rental income and potential for capital value growth.”
The Long Term Hold Fund will target investments in high-quality office buildings in central business districts and retail malls in suburban areas of cities in China and Hong Kong; the Dragon Fund will primarily focus on retail, office and residential property investment in key Chinese cities and Hong Kong as well as Singapore and Malaysia, Mr. Dear said in the release.
CalPERS spokesman Brad Pacheco was not immediately available for comment.