Business & Real Estate

Your California pension dollars at work in Las Vegas

The Miracle Mile Shops in Las Vegas, recently purchased by CalPERS.
The Miracle Mile Shops in Las Vegas, recently purchased by CalPERS. Miracle Mile Shops

CalPERS is betting big on Las Vegas real estate, purchasing a glitzy retail and nightlife complex on the Strip where entertainers such as Britney Spears and Jennifer Lopez regularly perform.

California’s giant public pension fund recently bought Las Vegas’ high-profile Miracle Mile Shops for a reported $1.1 billion. It’s one of the largest real estate deals CalPERS has made since the property bubble burst nearly a decade ago.

CalPERS purchased the 200-store mall, next to Planet Hollywood Resort & Casino, through a company called Institutional Mall Investors LLC. Institutional Mall, which owns 21 shopping centers, is a partnership between the California Public Employees’ Retirement System and Chicago-area real estate firm Miller Capital Advisory Inc.

The sellers, a partnership based in New York, announced the completion of the deal last week. Financial terms weren’t released, and CalPERS declined to comment. But the Las Vegas Review-Journal, quoting anonymous sources, said the deal was worth just under $1.1 billion.

While the purchase sounds splashy – the mall is anchored by a theater where entertainers perform – it’s actually in line with a more conservative approach CalPERS has taken to real estate investing in the years following the market crash.

After losing about $11 billion in real estate during the crash, CalPERS has largely moved away from speculative property deals and is putting more of its money into existing, leased-up shopping centers and office buildings. Earlier this year, for instance, the pension fund made one of the largest real estate investments in its history, spending a reported $1.9 billion on a New York office tower.

CalPERS’ real estate portfolio was worth $27.3 billion as of July 31. Its total portfolio is worth $302.35 billion.

Dale Kasler: 916-321-1066, @dakasler