CalPERS Buys $1 Billion in Real Estate; Nearly Half Purchased in California.

SACRAMENTO, Calif.--(BUSINESS WIRE)--July 14, 1999--

The California Public Employees' Retirement System (CalPERS) has been snapping up core real estate property while real estate investment trusts (REITs) have been sidelined because of low stock prices.

The Fund announced today that it has purchased more than $1 billion in real estate assets since the beginning of the year. Nearly half -- or $518 million -- represents purchases of California apartment, office, retail and industrial buildings.

"Valuable buying opportunities are abundant in the real estate market," said Charles P. Valdes, Chair of CalPERS Investment Committee. "As REITs extricate themselves of some of their assets, we've been able to purchase properties for our investment portfolio at relatively inexpensive prices."

According to a Bloomberg financial wire report, property acquisitions by REITs during the second quarter of 1999 were $2.7 billion, down 80 percent from one year earlier.

REITs continue to struggle with low stock prices, preventing the use of capital as currency for new acquisitions. Wary of adding more debt to their books, REITS are cutting back.

"What we are seeing is a trend from REIT acquisitions back to institutional investors," said Guy Jaquier, Senior Investment Officer for the System's real estate portfolio. "REITs gorged themselves with real estate portfolios two years ago, but in the wake of the stock market's volatility last year, they're having to downsize acquisitions staff and prune some of their assets."

CalPERS has largely taken a defensive approach in the purchase of real estate. More than 40 percent of the real estate purchased by the pension fund included grocery-anchored retail centers and industrial buildings, properties that are more resistant to downturn periods. Of the 41 properties purchased by the pension fund, 21 are located in California.

The acquisition activity follows on the heels of a two-year review of CalPERS real estate. The new core real estate includes:

-- $132 million in apartment properties purchased through San

Francisco, California-based SSR Realty Advisors and General

Investment & Development of Boston, Massachusetts;

-- $201 million in industrial properties purchased through San

Francisco, California-based RREEF and LaSalle Advisors of

Chicago, Illinois;

-- $226 million in retail properties purchased through San

Diego, California-based Burnham Pacific Properties;

-- $391 million in office properties purchased through San

Francisco-Based Hines Interests and Commonwealth Pacific of

Los Angeles, California; and

-- $100 million in various real estate investment trusts.

CalPERS is the nation's largest pension fund with assets totaling more than $155 billion, of which $7 billion is invested in real estate. The System provides retirement and health benefits to more than 1 million State and local public employees and their families. For further information on CalPERS, please visit the System's Web site at www.calpers.ca.gov.