CalPERS drops BlackRock as manager of apartment portfolio

The California Public Employees’ Retirement System, the largest public pension fund in the U.S., said it replaced a unit of BlackRock Inc. as the manager of its $1-billion apartment complex real-estate portfolio.

The decision comes after CalPERS was forced to write off a $500-million investment with BlackRock in New York’s Stuyvesant Town and Peter Cooper Village through a partnership with Tishman Speyer Properties. CalPERS said it was consolidating the apartment portfolio with GID Investment Advisers, an affiliate of General Investment & Development Cos.

CalPERS suffered a 37% loss in its real-estate holdings in the fiscal year that ended June 30, a decline equivalent to 1.3% of the pension fund’s market value at the time. Despite the loss, the fund earned 11.4% for the year as its stock, bond and private-equity fund investments rose in value.

“By consolidating our core multifamily portfolio under a single partner/manager, we anticipate lower costs, improved efficiency and enhanced performance,” said Ted Eliopoulos, who heads CalPERS’ real-estate investment division.

BlackRock Realty Advisors had managed the pension fund’s apartment complex portfolio since 1998. BlackRock’s real estate unit teamed with Tishman Speyer to buy the Manhattan developments for $5.4 billion in 2006. CalPERS said last November it was reviewing its ties with the New York company after the write-down.

BlackRock, the largest global investment management firm, did not comment.

Closely held GID will manage investments in 57 apartment projects with 14,674 units in 13 states valued at about $1.1 billion, CalPERS said. Boston-based GID currently manages about $5.3 billion worth of apartments at 127 properties across the U.S.

CalPERS also wrote off a $970-million investment last year in the Newhall Ranch project north of Los Angeles. The developer, LandSource Communities Development, entered Chapter 11 bankruptcy reorganization after failing to restructure debts.