With the residential real estate market turning around, CalPERS is dipping its toe back in the housing market.
The big California pension fund has invested in an Orange County residential project called Rancho Mission Viejo. It represents a fairly significant housing deal for CalPERS, which has been de-emphasizing residential real estate following the market crash of 2008.
After losing several billion dollars in the housing market, the California Public Employees’ Retirement System has begun focusing more of its dollars on income-producing properties like office buildings that are already leased up. The returns are lower, but so is the risk.
The Orange County investment doesn’t represent a major reversal of strategy, however. CalPERS had committed dollars years earlier to a real estate fund managed by Resmark Cos. of Los Angeles, and Resmark is now investing the pension fund’s money in Rancho Mission Viejo.
For CalPERS, “this is not new money,” fund spokesman Joe DeAnda said Friday. “This is in our legacy portfolio.”
DeAnda said it’s likely CalPERS has made similar housing investments in the past few years, but he didn’t provide specific information.
CalPERS’ investment in the Orange County deal comes to about $33 million, according to a report by Bloomberg news. DeAnda said he couldn’t confirm that figure.
The sum represents about 10 percent of the $366 million Resmark manages for CalPERS. Resmark is a Los Angeles real estate firm that also manages money for CalSTRS, the teachers’ pension system.
CalPERS’ entire real estate portfolio totals $22 billion, or about 8 percent of the fund’s total holdings of $266 billion.
Rancho Mission Viejo, set on several hundred acres in southern Orange County, is in its early stages. Ultimately, some 14,000 homes are expected to be built over 20 years.
Investing in big master-planned communities has proved risky for CalPERS. The fund lost its entire $900 million investment on one deal alone – a housing project called Newhall Ranch near Los Angeles. The project went bankrupt in 2008.
Call The Bee’s Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.