With a Preqin survey already pitching Asia as one of the markets to see increased investment activities in coming months, Sacramento-based California Public Employees’ Retirement System (CalPERS) has already announced its plans to invest in high-quality office buildings and retail malls in China.
CalPERS has assets worth approximately $236 billion and announced its decision to invest in two new real estate funds worth $530 million.
From this amount, CalPERS will invest $480 million to the ARA Long Term Hold Fund, a member of the Cheung Kong Group, and $ 50 million in ARA’s Dragon Fund II, the statement said.
According to a statement released by Joe Dear, CalPERS Chief Investment Officer, income growth and urbanization remain the key themes for growth in China. “China’s office and retail sectors offer stable rental income and potential for capital value growth,” he said.
ARA’s Long term hold fund will target investments in tier I and II cities in China and Hong Kong. The funds will be committed in high-quality office buildings in central business districts and retail malls in well-located, densely populated suburbs.
Whereas, the Dragon Fund will focus on retail, office and residential property investment in key cities of China, Singapore Hong Kong, and Malaysia.
On the decision to choose ARA as their investor, Ted Eliopoulos, Senior Investment Officer for CalPERS real estate program, said in a statement that the team had done well for CalPERS’ funds over the years. “ARA is a disciplined investor with a strong bench of senior executives and capabilities in many aspects of real estate operations in Asia,” he said.
CalPERS had earlier invested $500 million in ARA Dragon Fund I.
ARA’s Dragon Fund earned the pension fund a 19.2 percent return for the one year period ended March 31, 2012, and an annual 8.4 percent return over the last three years through March 31, 2012.
As of April 30, 2012, CalPERS’ actual investment in real estate is $18.9 billion dollars, according to its website.