CalPERS invests $530m in two China-focused property funds
The California Public Employees’ Retirement System (CalPERS) has committed $530 million to two China-focused real estate funds run by ARA Asset Management, a Singapore-listed affiliate of Cheung Kong Holdings.
The pension system will invest $480 million in ARA Long Term Hold Fund, which targets high quality office buildings in central business districts and retail malls in the suburbs of first- and second-tier cities in China and Hong Kong.
A further $50 million will go to Dragon Fund II, a vehicle focused on retail, office and residential property in China, Singapore, Hong Kong and Malaysia. CalPERS previously committed $500 million to ARA Dragon Fund I in 2007. The investment delivered a 19.2% return for the year ended March 31, 2012 and an annual 8.4% return over three years.
"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."
CalPERS had $236.8 billion under management as of April 30, 2012, of which 8% was invested in real estate. Current exposure to Asia in the asset class includes IL&FS India Realty funds I and II, LaSalle Asia Opportunity Fund III, LaSalle Japan Logistics II, MGP Asia Fund II, Sun Apollo India Real Estate Fund and several vehicles operated by AETOS and Secured Capital Japan.
ARA operates five private funds as well as real estate investment trusts (REITs), real estate management services and corporate finance advisory services.
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