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CalPERS Cuts Out

In what is the largest shopping center portfolio purchase ever, Macquarie Countrywide Trust, an Australian limited property trust, and frequent joint venture partner, Regency Centers, in February announced the purchase of 101 shopping centers from the California Public Employees Retirement System for $2.74 billion.

Regency has a 35 percent stake while Macquarie owns the rest. The company plans to sell some of the weaker properties in its existing portfolio to pay for the CalPERS purchase. It also plans to sell about five “less than Class A” development sites in the CalPERS portfolio, says John Delatour, managing director with Regency Centers.

The portfolio sale also seems to be part of CalPERS' new strategy to scale down its exposure to real estate as many fear the market can only go down after recent highs. Last December, CalPERS announced it would reduce its real estate allocation from 9 percent to 8 percent; amounting to roughly $1.7 billion.

Reaping the rewards of such a change is Countrywide Trust and Regency, which own one of the top shopping center portfolios in the country. In a three-mile radius of the acquired properties, average household income is $82,000 with population at 110,000. That population density is about 55 percent greater than Regency's existing portfolio, according to Macquarie.

CalPERS will continue to invest in shopping centers, says Stuart Halpert, chairman of CalPERS retail adviser, Washington Realty Trust. It currently is under contract to buy two centers and is in negotiations to purchase another two.

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