Blackstone Group LP announced in a press release that they will be acquiring approximately $3 billion of global real estate fund interests from the California Public Employees' Retirement System (CalPERS).
The acquisition is in line with CalPERS strategic plan to reduce cost and external investment managers.
Blackstone said in their press release that its Strategic Partners Fund Solution will be acquiring 43 international and domestic funds from CalPERS' non-strategic real estate portfolio.
The company said that it marks the industry's largest secondary transaction to date.
Verdun Perry, the co-head of Strategic Partners, said in the press release that the acquisition underscores the company's ability to source and acquire large, complex portfolios.
"Strategic Partners' relationships with global investors and real estate managers, coupled with a long history of executing secondary transactions on a fair, timely and confidential basis, enable us to transact on a variety of unique opportunities," he said.
CalPERS said in their own press release that the assets that they are selling no longer align with the strategic goals of the agency's real estate program.
CalPERS' real estate program currently holds about $27.1 billion in commercial, industrial, and residential assets.
CalPERS adds in the press release that the transaction also marks the agency's first move under its new strategic plan.
CalPERS is looking to reduce the number of external investment managers in the total fund to approximately 100 by 2020, down from its current approximate of 200.
CalPERS adds in the press release that the strategic plan will also result in larger and more strategic relationships.
"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," Paul Mouchakka, the managing investment director for real assets at CalPERS, said in the press release.
He adds that the transaction "also represents the continued effort to reduce complexity across the CalPERS fund."
The Wall Street Journal adds that CalPERS has bet big on speculative properties, like shopping malls and office developments, before 2008.
The recession, though, has wiped out about half of the value it invested in.
The Wall Street Journal adds that CalPERS lost about $10 billion during the recession.
