Top 3 Deadly Mistakes CalPERS Had Made in Institutional Real Estate

The California bear-of-an-investor has struggled with its public fund peers when it comes to real estate return performance.

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With roughly US$ 31.8 billion generously allocated toward real assets, the California Public Employees’ Retirement System (CalPERS) continues to compete for real estate in developed markets such as North America and Europe. Here are three major mistakes by CalPERS with regard to its unlisted property portfolio.

Returns CalPERS Real Estate Returns Real Estate Policy Benchmark
1-Year 7.1% 12.6%
3-Year 11.5% 12.6%
5-Year 12.4% 12.1%
10-Year -0.5% 8.7%

 

Unhealthy Adventurism

In 2005, CalPERS went on a shopping spree in real estate, getting entangled in complex land deals and mega portfolio purchases – all the while using leverage at times to spice up returns. After the global shakeout of 2007 and 2008, CalPERS got burned on a number of property deals. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]


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