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."
© Copyright The Sacramento Bee. All rights reserved.
• Read more articles by Dale Kasler
What You Should Know About Comments on Sacbee.com
Sacbee.com is happy to provide a forum for reader interaction, discussion, feedback and reaction to our stories. However, we reserve the right to delete inappropriate comments or ban users who can't play nice. (See our full terms of service here.)
Here are some rules of the road:
• Keep your comments civil. Don't insult one another or the subjects of our articles. If you think a comment violates our guidelines click the "Report Abuse" link to notify the moderators. Responding to the comment will only encourage bad behavior.
• Don't use profanities, vulgarities or hate speech. This is a general interest news site. Sometimes, there are children present. Don't say anything in a way you wouldn't want your own child to hear.
• Do not attack other users; focus your comments on issues, not individuals.
• Stay on topic. Only post comments relevant to the article at hand.
• Do not copy and paste outside material into the comment box.
• Don't repeat the same comment over and over. We heard you the first time.
• Do not use the commenting system for advertising. That's spam and it isn't allowed.
• Don't use all capital letters. That's akin to yelling and not appreciated by the audience.
• Don't flag other users' comments just because you don't agree with their point of view. Please only flag comments that violate these guidelines.
You should also know that The Sacramento Bee does not screen comments before they are posted. You are more likely to see inappropriate comments before our staff does, so we ask that you click the "Report Abuse" link to submit those comments for moderator review. You also may notify us via email at feedback@sacbee.com. Note the headline on which the comment is made and tell us the profile name of the user who made the comment. Remember, comment moderation is subjective. You may find some material objectionable that we won't and vice versa.
If you submit a comment, the user name of your account will appear along with it. Users cannot remove their own comments once they have submitted them.
Order Reprint
About Comments
Reader comments on Sacbee.com are the opinions of the writer, not The Sacramento Bee. If you see an objectionable comment, click the "Report Abuse" link below it. We will delete comments containing inappropriate links, obscenities, hate speech, and personal attacks. Flagrant or repeat violators will be banned. See more about comments here.