CalPERS Invests $1.9B Into Blackstone, Mesa West Debt Funds

In an effort to take bigger bets in the private equity sector, the country’s largest public pension fund has poured almost $2B into two significant real estate debt funds.

California Public Employees' Retirement System invested $1.5B in Blackstone Real Estate Debt Strategies V and $350M in Mesa West Real Estate Income V, IPE Real Assets reported. The $444B pension fund disclosed the investments in a meeting document.

Blackstone’s debt fund has raised $3.59B for lending, liquid securities and structured debt. In 2020, Blackstone announced that it raised $8B for its Blackstone Real Estate Debt Strategies IV, marking the firm's largest real estate debt fund ever.

Mesa West, the real estate credit arm of Morgan Stanley Investment Management, closed on its Mesa West Real Estate Income Fund V, raising $1.37B. The fund will provide loans for value-add or transitional commercial real estate assets across the U.S. In February, the fund exceeded its original $1B target.

CalPERS also made a $750M investment in Brookfield Infrastructure Fund V and a $500M commitment to DB SAF C Strategic Partners, IPE reported.

In May, CalPERS CEO Marcie Frost said the fund will start a review of its private equity portfolio, adding that there is room for more investment, The Financial Times reported.

“If [the CalPERS board] had conviction that we could put more money into private equity, the appetite is there to do it from an investor perspective [and] from the investment office’s perspective,” Frost told the FT. “That’ll be part of the asset allocation review.”

Earlier this summer, CalPERS announced plans to invest in venture capital, a sector the pension fund had strayed away from in the past, the FT reported. Venture capital makes up just 1% of CalPERS' $55B private equity portfolio, but the fund has plans to increase investments from roughly $880M to $5B.

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