CalPERS Planning Investment in China

The California Public Employees’ Retirement System plans to invest $400 million in Chinese properties together with Hines Real Estate Investment Trust Inc.

An agreement covering the investment will be signed next month, said Michael McCook, senior investment officer for real estate for CalPERS.

This is the first direct investment in Chinese real estate for CalPERS, McCook said Wednesday. The fund’s rules restrict its investment in the world’s fastest-growing major economy because China fails to meet criteria on issues such as transparency, political stability and labor practices.

McCook said he obtained special permission for the planned investment after three of the fund’s board members visited the country in November.

“This will be a start, and if it goes well it will lead to other things,” McCook said. “China and India are high on our radar screen and will be for us in the next 15 to 20 years.”

Hines probably will start construction of a commercial and residential project in Beijing within 60 days after the deal is signed, McCook said.

CalPERS, with assets of more than $200 billion, is seeking to increase its allocation to global real estate investment relative to assets in stocks and bonds.