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CalPERS commits $530 million to Asia real estate funds

Thursday, August 16, 2012
Opalesque Industry Update: The California Public Employees’ Retirement System (CalPERS) today announced a $530 million investment commitment to two new real estate funds that will target investments in China.

CalPERS will invest $480 million to the ARA Long Term Hold Fund sponsored by ARA Asset Management, a member of the Cheung Kong Group. The pension fund will also invest $50 million in ARA’s Dragon Fund II. CalPERS previously invested $500 million to ARA Dragon Fund I in 2007.

“Income growth and urbanization remain the key themes for growth in China,” said Joe Dear, CalPERS Chief Investment Officer. “China’s office and retail sectors offer stable rental income and potential for capital value growth.”

ARA’s Long Term Hold Fund will target investments in high quality office buildings in central business districts and retail malls in well-located, densely populated suburbs in the first and second tier cities in China and Hong Kong. The Dragon Fund will primarily focus on retail, office and residential property investment in key cities of China, Singapore Hong Kong, and Malaysia.

“ARA is a disciplined investor with a strong bench of senior executives and capabilities in many aspects of real estate operations in Asia,” said Ted Eliopoulos, Senior Investment Officer for CalPERS real estate program. “The team has performed well for our fund over the years.”

CalPERS first investment in 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.

CalPERS has assets of approximately $238 billion. It administers retirement benefits for more than 1.6 million California State, local government, and public school employees, retirees, and their families on behalf of more than 3,000 public employers, and health benefits for more than 1.3 million enrollees. The average CalPERS pension is $2,332 per month. The average benefit for those who retired in the most recent fiscal year that ended June 30, 2011, is $3,065 per month.

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