The California Public Employees’ Retirement System (CalPERS) is selling off $3 billion of its $27.1 billion real estate portfolio in the industry’s largest secondary market transaction to date.
Blackstone’s Strategic Partners affiliate agreed to purchase the limited partnership interests, which span 43 international and domestic funds.
“This sale allows CalPERS to focus on our strategic plan and on investing in assets and managers that better align with our real estate goals.”“This is a marquee transaction for the real estate secondaries industry,” said Mark Burton, head of Strategic Partners’ real estate business.
“This sale allows CalPERS to focus on our strategic plan and on investing in assets and managers that better align with our real estate goals,” said Paul Mouchakkaa, managing investment director for real assets at CalPERS. “It also represents the continued effort to reduce complexity across the fund.”
The sale is part of a broader strategic plan by CalPERS to cut the number of its external investment managers in half over the next five years, from approximately 200 now to 100 by 2020.
CIO Ted Eliopoulos said in June this reduction in managers is “to gain the best deal on costs and fees that we can.”
Since his appointment last year, Eliopoulos has been working to cut costs through a wide-ranging overhaul of the $300 billion portfolio. After dumping CalPERS’ $4 billion allocation to hedge funds in September 2014, the CIO turned to private equity, announcing plans in January to reduce the number of managers it uses by two-thirds.
“By having fewer managers, at larger scale, we will be able to reduce our overall costs,” Eliopoulos said.
Related: CalPERS Plans to Cut Managers by 50% & CalPERS’ Manager Cull to Hit Real Estate