Paul Mouchakkaa, the head of real assets for the California Public Employees’ Retirement System, offered simple guidance to firms aspiring to manage capital for the $311 billion pension fund: “Not to sound scolding, and I don't mean it that way, but just do your homework.”
At PERE’s Global Investor Forum: Los Angeles, a conference run last week by Infrastructure Investor’s sister publication, Mouchakkaa told delegates that the best way for a manager to get an idea in front of CalPERS’ team is to research the pension system’s strategic plan, investment policy and existing investment structures. The country’s largest public pension fund managed $27.9 billion in real estate as of December 31.
“CalPERS is a transparent organization, so our investment parameters and strategies are available on our website,” he said. “As investment managers, you’re the experts transacting in the market. Is there a gap out there that might meet our needs and is it aligned with our role and aligned with our strategy, and is it something that may work for CalPERS?”
Mouchakkaa recounted a manager meeting that stood out last month when he attended the Infrastructure Investor Global Summit in Berlin. Rather than making a formal presentation, the manager, with whom Mouchakkaa had not previously met, started asking questions, and a dialogue kicked off from there.
“It was refreshing and more enjoyable, and much more memorable, than saying, ‘hey, let's just keep flipping through [presentation] pages,’” he said.
Mouchakkaa also noted that today’s heated real estate market makes putting capital to work more difficult than investing earlier in the real estate cycle. Five years ago, a manager investing on behalf of CalPERS might have put to work 35-40 percent of the pension system’s capital commitment over the course of a year. Now, in a “much tighter and a more competitive situation,” the percentage of committed capital that is actually deployed is down to 15-20 percent.