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CalPers Feels the Heat Replies |
HenryTo
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 Posted: Tue Apr 20, 2010 1:43 am Post subject: |
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CalPERS changes its investment policy in real estate:
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CalPERS changes policy on real estate investing
Calif. pension fund changes policy on real estate investing to protect low-income residents
SACRAMENTO, Calif. (AP) -- The nation's largest pension fund on Monday changed its policy on investing in real estate to balance its socially responsible investment philosophy with its quest for profits.
The decision came after the California Public Employees Retirement System, which manages about $210 billion in assets, saw its real estate portfolio lose nearly half of its value from September 2008 to September 2009.
As of Friday, CalPERS' total real estate portfolio was worth about $14.8 billion.
Some of the biggest losses came from investments in real estate ventures whose financial success depended on pushing low-income residents out of rent-controlled housing.
The revised policy, adopted at a CalPERS board meeting Monday, says the fund will not participate in investment strategies that rely on eliminating rent-regulated housing or raising rents above regulated levels.
CalPERS is known for its influence on socially responsible investing. Earlier this year, it voted to remove the limit on the number of shareholder proposals it can issue to companies in its portfolio, a change that could boost its influence among publicly traded companies.
Monday's action by the nation's largest pension fund could encourage other large investors to adopt similar policies.
CalPERS has had a practice of trying to invest in projects that will help low-income tenants. But critics say the funds cannot make money off such investments unless tenants enjoying regulated rental rates are pushed out of their homes to make room for people who will pay more.
CalPERS wants to balance a socially responsible investment philosophy with the need to ensure adequate long-term returns for its pensioners.
"The intent is to prevent us from investing in those strategies that are not well intended and had tenant impacts that were unacceptable to staff," Laurie Weir, CalPERS' real estate portfolio manager, told the board. "We really are trying to prevent those tenant impacts that we have seen over the past year."
A real estate investment that went bust in New York last year prompted CalPERS to re-evaluate its approach to that aspect of its portfolio.
CalPERS lost $500 million in a failed investment in Stuyvesant Town and Peter Cooper Village in New York that displaced low-income residents. The California State Teachers' Retirement System lost $100 million in the same deal.
The policy change was prompted by both those real estate losses and the risk to CalPERS' reputation, said spokesman Brad Pacheco.
CalSTRS is also considering a policy that would ban investments in strategies that are intended to capitalize on displacement of low-income households, spokesman Ricardo Duran said in an interview.
"Public pension funds should not be used to evict working people from their housing," said Dean Preston, an advocate for the group Tenants Together.
Preston said about 1,500 residents were displaced from a property called Page Mill in East Palo Alto, Calif. CalPERS invested in that property and lost another $100 million.
"We think this decision is a milestone," Preston said after the meeting. "We hope that it makes it more difficult for investors making this type of investment to accomplish their goal." |
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HenryTo
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| Posted: Wed Feb 24, 2010 2:16 pm Post subject: |
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CalPERS feels more heat in its investments in Carlyle, Apollo, and Silver Lake. Note that Blackstone's stock price has risen 40% since July 1, 2009, so these numbers are very dated (although still telling):
http://www.pehub.com/64216/calpers-comes-clean-on-pe-firm-valuations/
| Quote: | The oldest of the three investments is in The Carlyle Group, with CalPERS paying $175 million for a 5.5% stake in early 2001. That investment was valued at $242 million as of June 30, 2009 — thus valuing Carlyle at approximately $4.4 billion. Pretty good deal, except when one realizes that CalPERS carried its Carlyle stake at a whopping $925 million as of June 2008 (for a firm value of nearly $17 billion).
In 2007, CalPERS invested around $581 million into Apollo Management, in exchange for around a 9% stake (yes, this was a deal brokered by Al Villalobos). CalPERS reports that the stake was valued at just $124.6 million as of June 30, 2009. This is a major drop from the $412 million carrying value on year earlier, and would value Apollo at around $1.38 billion.
Finally, there is Silver Lake Partners. CalPERS was carrying its $275 million investment at cost in the 2008 report, because it was so new. One year later, that figure dropped to $162.33 million. The position represents a 9.9% ownership stake in Silver Lake, thus valuing the tech-focused firm at around $1.64 billion.
All together, CalPERS invested around $1.03 billion into the three firms (not including individual fund commitments). The aggregate carrying value through last summer was just $528 million… |
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HenryTo
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HenryTo
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rffrydr
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| Posted: Tue Nov 17, 2009 8:59 am Post subject: |
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Trying to exclude the pay-and-pray aspect in RE investment in style at he time CalPERS tried to unlock value the old fashioned way--cronyism. Backfiring now in big way for this highly image-crafted institution which is now having it image imposed upon it. New era in public utilities?
http://www.sacbee.com/business/story/2327692.html
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rffrydr
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diesel
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| Posted: Sun Feb 01, 2009 1:53 am Post subject: |
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http://www.wsws.org/articles/2009/jan2009/calp-j30.shtml
| Quote: | | CalPERS is the largest pension fund in the US and the fourth largest in the world. At its height in October 2007 it had $260 billion in assets, comparable to the GDP of Poland, Indonesia or Denmark. At the end of 2008 CalPERS was worth $186 billion, one of its worst annual declines since the fund’s inception in 1932. It is one of the latest casualties of the financial collapse on Wall Street. |
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rffrydr
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HenryTo
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| Posted: Sun Oct 26, 2008 12:51 pm Post subject: |
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Meanwhile, CalSTRS has been heavily playing defense and is poised to redeploy back into equities once credit spreads start coming in significantly:
http://www.sacbee.com/103/story/1311408.html |
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HenryTo
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| Posted: Sat Oct 25, 2008 5:37 pm Post subject: |
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Another unintended consequence: CalPERS forced to sell stocks to raise cash to meet capital calls from private equity funds:
http://online.wsj.com/article/SB122488856222368463.html?mod=testMod
| Quote: | The nation's largest public pension fund, known as Calpers, is unloading stocks in a falling market to make sure it has enough cash to meet its obligations.
The pressures come as the California Public Employees' Retirement System has had to raise cash to fulfill commitments to private-equity firms and real-estate partners. The giant fund's predicament is another sign of how the market selloff is tightening the screws on pension funds nationwide. Many other pension funds have similar partnerships and could also confront liquidity strains.
Members of the board investment committee at Calpers held a closed-door session on Monday and discussed ways to raise more cash, according to people familiar with the matter. The issue was brought to the attention of the committee after members of the investment staff expressed concern, a person with knowledge of the matter said. |
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