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FACTBOX-Calpers' love affair with the exotic, untapped

Published 10/23/2009, 07:31 AM
Updated 10/23/2009, 07:35 AM
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(This is part of a package on risk at Calpers, to see other stories and graphics double click on: [ID:nN2254816])

NEW YORK, Oct 23 (Reuters) - It is little wonder that the California Public Employees' Retirement System is considered the most important public pension fund in the United States as it oversees $200 billion in assets, roughly twice the size of the Golden State's annual budget.

But it's not only its sheer size that's garnered attention.

Calpers has been the vanguard of pension investing, sometimes aggressively in exotic and hard-to-comprehend projects and securities.

The following provides a taste:

1993:

Calpers approached Enron about a joint venture called JEDI, or the Joint Energy Development Investments. Calpers invested $250 million in the partnership. Fortunately, Enron in 1997 bought back its stake in JEDI from Calpers for $383 million and immediately sold it to another limited partnership called Chewco, named after the Chewbacca character in "Star Wars."

1998:

Calpers entered another private equity limited partnership with Enron, called JEDI 2. Calpers committed $500 million to that deal but only invested $156 million. In June 2000, around the time the energy crisis broke out, Calpers stopped investing in JEDI 2. Calpers recouped $171 million from JEDI 2.

1999:

Calpers becomes one of the few pension funds in the high-end wine vineyard industry. In 2002 and 2004, Calpers made initial investments of $100 million each in Pacific Vineyard Partners and Meriwether Farms. But as of Sept. 30, 2006, the total amount invested in land, vineyards and vineyard development with Pacific Vineyard was valued at $76.3 million, while Meriwether Farms at $57.1 million, according to Calpers. Those investments made a comeback in the ensuing years: as of March 31, 2009, Pacific Vineyard was $94.9 million while Meriwether was $77.9 million.

2002:

Calpers begins investing in hedge funds in April of that year "with the goal of diversifying its investment portfolio, managing risk, and adding value to the fund," it said in a press release. Its risk-managed absolute return strategies (RM ARS) program was down 27 percent for the year ending June 30, 2009. Its five-year return ending June 30, 2009, stood at -0.7 percent.

2006:

Calpers commits $500 million in equity to a sprawling apartment property on Manhattan's East Side, called Peter Cooper Village and Stuyvesant Town. Calpers made the investment in a joint venture led by closely held developer Tishman Speyer and BlackRock Realty Advisors -- shortly after the venture purchased the 56-building complex from MetLife Inc. for $5.4 billion.

On October 22, 2009, Tishman Speyer and its partners moved closer to a default on $3 billion in debt on the Peter Cooper Village/Stuyvesant Town complex after a New York court ruled the owners illegally raised rents on thousands of tenants.

For story, please see [nN14268606]

2007:

Calpers completes a real-estate venture known as LandSource, a $2.5 billion deal. It became one of the priciest U.S. residential-land transactions ever as LandSource filed for bankruptcy protection in early 2008.

SOURCE: Reuters, Calpers and press reports (Reporting by Jennifer Ablan, editing by Claudia Parsons)

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