The California Public Employees' Retirement System said it named Paul Mouchakkaa, a Morgan Stanley managing director, as head of its still-recovering $30-billion real-estate portfolio.
Mouchakkaa had been global head of research and strategy for Morgan Stanley's Real Estate Investing unit, which manages $33 billion in property investments worldwide and has long been considered one of Wall Street's leading real estate operations.
“Paul is a talented and experienced real estate professional, and we're thrilled to have him on our team,” said Theodore Eliopoulos, CalPERS' chief investment officer. “He has a proven track record of success, and I’m confident that will continue at CalPERS.”
Mouchakkaa, who was named a Morgan Stanley managing director last year, had previously worked at Pension Consulting Alliance, CalPERS' main real estate consultant, according to his profile on LinkedIN.
Mouchakkaa fills the post vacated by the promotion of Eliopoulos, who ran the real estate portfolio from 2007 until he was named interim chief investment officer over the fund’s entire $300-billion portfolio a year ago. Eliopoulos’ appointment was made permanent in September.
Mouchakkaa takes over a division still digging out from devastating losses of the 2007 mortgage meltdown and the Great Recession. The unit’s speculative property investments in Southern California, Chicago and elsewhere were far riskier than those held by other public pension plans.
At one point, losses erased about half the portfolio's value. And CalPERS' real estate returns trailed industry benchmarks by more then 5 percentage points over the 10 years, a huge underperformance in an industry that measures returns in hundredths of a percentage point.
Under Eliopoulos, the real estate portfolio regained some ground. Its holdings, including small ones in infrastructure and forestland, returned 8.4% annually, 2.16 percentage points below the benchmark, for the last five years.
When measured over the last three years, however, the return on investments was 12.9%, beating the benchmark by 1.49 percentage points.