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CalPERS makes $695m from GI fund

Knock-out return for The California Public Employees’ Retirement System’s (CalPERS) from its original $500m commitment to GI Partners Fund I.


The California Public Employees’ Retirement System (CalPERS) has revealed it has made a profit of $695 million from its original investment in the first ever fund raised by Menlo Park-based, GI Partners.

The California plan lifted the lid on the stellar performance turned in by GI Partners I, which is of a 2001 vintage and was used for buying asset-backed companies.

It said that it had made $695 million of profit from its original commitment of $500 million translating into a net annualized internal rate of return of 31 percent.

CalPERS does not often release its performance figures upon the end of a real estate fund investment, but has made a point of doing so in this case because the returns have been so impressive.

GI Partners Fund I is a 10-year-old fund that has now closed after selling its last asset.

CalPERS said it made the $500 million as part of joint initiative between its real estate and private equity programs to invest in technology-related assets.

“These significant returns are a credit to GI Partners and CalPERS investment professionals’ performance over the past 10 years,” said Joseph Dear, CalPERS chief investment officer.”

He added: “We have a long investing horizon, and the fund’s success is testimony to our commitment to an investment strategy that seeks superior risk-adjusted returns across all asset classes.”

CalPERS also has commitments of $500 million each to GI Partners Funds II and III, and GI Partners also manages more than $2 billion in assets in CalPERS CalEast real estate portfolio.

Last December, GI was awarded the management contract of the plan’s CalEAST Global Logistics industrial real estate portfolio that was also jointly awarded to RREEF.

“We’re pleased that our investment in GI Partners Fund I has ended with such solid returns,” said Ted Eliopoulos, CalPERS senior investment officer in the real assets group. “These strategic partnerships help us maintain our investment edge in a very competitive environment.”

GI Partners, which was founded by Rick Magnuson, also made it onto the PERE 30 list for the first time since launching the industry rankings four years ago.

It is the 24th largest private equity real estate firm in the world, having raised $3.2 billion in the last five years.

It raised $1.3 billion for its GI Partners Fund II in 2006 and $1.8 billion for GI Partners III in 2009.

The firm’s strategy is to invest in North America and Europe, particularly the UK and Germany, which it has been doing with alacrity. Investments over the past two years have included assets in the childcare and healthcare sectors, residential loans in the Netherlands, mortgage-backed assets in Germany and a joint venture to buy a 1.4 million-square-foot mall in Colorado.