CalPERS signals intent to invest more in Asian real estate

Published: Friday, Aug. 17, 2012 - 12:00 am | Page 6B

China is in a slowdown – but CalPERS thinks its economy is ripe for a major investment.

The California Public Employees' Retirement System said Thursday it's investing $530 million in commercial real estate in China and other Asian countries.

CalPERS said the money will be invested in office buildings and shopping malls. In keeping with CalPERS' conservative, post-crash approach to real estate, the investments will be confined to projects that are already built and leased up, said pension fund spokesman Brad Pacheco.

The pension fund said it's investing in two real estate funds operated by ARA Asset Management, an affiliate of a massive investment conglomerate based in Hong Kong.

The first investment, totalling $480 million, will focus exclusively on China and Hong Kong. The second, worth $50 million, will include investments in China, Singapore and Malaysia.

CalPERS also invested $500 million in Asian real estate with ARA five years ago. That investment generated 19.2 percent returns last year and 8.4 percent annual returns over the past three years.

CalPERS announced the deal on the same day that China's government provided fresh insights into the country's economic slowdown.

The Ministry of Commerce reported that direct foreign investment in China fell 8.7 percent in July from a year earlier. It was the eighth decline in nine months, according to Bloomberg News. Ministry officials said the European Union's sagging economy is hurting China.

CalPERS, however, said it's investing for the long haul – and it believes ARA can pinpoint the right properties to buy.

"We're well aware of the concerns regarding the market economy, the global economy," said CalPERS senior investment officer Ted Eliopoulos, who oversees the pension fund's real estate portfolio, in an interview. "We've identified a world-class operator in ARA."

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