Timberland Invest...
Follow
Find tag "CalPERS"
63.1K views | +4 today
Timberland Investment
Timber Industry | Deals & Transactions | Investment Rationale | Financial Performance | Investors | Asset Managers
Curated by Sam Radcliffe
Your new post is loading...
Your new post is loading...
Scooped by Sam Radcliffe
Scoop.it!

Calpers Misses Target With 2.4% Return in Past Fiscal Year

Calpers Misses Target With 2.4% Return in Past Fiscal Year | Timberland Investment | Scoop.it

The California Public Employees’ Retirement System, the largest pension in the U.S., said it earned 2.4 percent last fiscal year, below its target rate as financial-market turbulence depressed stock and bond returns. The $300 billion fund earned 1 percent on public-equity holdings and 1.3 percent in fixed-income investments, said Ted Eliopoulos, chief investment officer. Real estate returned 13.5 percent, while private equity gained 8.9 percent.

***
Calpers said it has earned 10.9 percent over a three-year period and 10.7 percent over five years. Its real-estate and private-equity returns lag by a quarter.
***
Eliopoulos said Calpers is reviewing its $2.2 billion it has invested in forestland and timber after losing 0.3 percent in the fiscal year, more than 1,000 basis points below its benchmark. He called the loss a “rather dramatic underperformance.” Pensions invest in forestland to generate long-term, stable income and to hedge against inflation.

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Calpers Puts Portion of Timber Holdings Up for Sale

Calpers Puts Portion of Timber Holdings Up for Sale | Timberland Investment | Scoop.it

The California Public Employees’ Retirement System, or Calpers, is seeking buyers for roughly 300,000 acres of forestry largely in Louisiana amid a broader review of its timber holdings, according to people familiar with the matter. The woodland represents about one-fifth of roughly 1.3 million U.S. acres controlled by the Sacramento-based fund.

***
A decision to sell the Louisiana assets follows an announcement last September that Calpers would exit from a $4 billion investment in hedge funds due to concerns about complexity, costs and whether the commitment was large enough to affect overall returns.


“We continue to look through the entire portfolio to make sure that all programs fit with our current strategic priorities and our efforts to reduce costs and complexity,” a Calpers spokesman said. He added “no decisions have been made,” and there is no deadline for completion of the pension fund’s internal review of forestry holdings.


Any move Calpers makes away from the timber industry will likely influence other investors because of its size and history as an early adopter of alternatives to stocks and bonds.
***
Calpers’s first investments in timber happened in the mid-1980s, but much of its $2.3 billion in forests was purchased when land prices were still high before the last housing bust. Since the financial crisis, timber has been Calpers’s weakest-performing asset, according to a May filing. Forestlands lost 0.4% over the past five years, while Calpers’s overall fund rose 9.4%.
***
Calpers has an additional one million acres in east Texas it may consider selling if the Louisiana sale goes well, one of the people said. Those Louisiana assets could fetch several hundred million dollars, the people said. One of Calpers’s external timber managers, Campbell Group LLC of Portland, Ore., has hired UBS AG to run the sale.


The size of Calpers’s timber holdings is another reason the portfolio is under review. It represents only about 1% of total assets at Calpers, and Mr. Junkin added in his letter to Mr. Jones that “it could be argued” the allocation “is not large enough to have a significant impact” on overall returns.


Nearly 80% of Calpers’s timber holdings are in the U.S., with the rest in Latin America and the Asia Pacific area. One option under consideration for the U.S. timber portfolio is to leave it completely, but there are no immediate plans to sell any portion of the international forestry assets in Latin America and the Asia-Pacific region, according to people familiar with the matter.

Sam Radcliffe's insight:

See Jack Bridge's frank comments at "Risk-Adjusted Returns" http://sco.lt/5dvwmn


What the article doesn't say: the market for large timberland properties is pretty frothy right now, so what better time to sell? As Jack Lutz notes, this will easily be absorbed by the full-of-dry-powder TIMO's, although some may need buying partners if this is offered as a single transaction.


The timber REIT's have been buying back shares because they represent the cheapest timberland they can find. We'll see what they think of this opportunity...

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

CalPERS approves new asset allocation, ups timberland portion

CalPERS approves new asset allocation, ups timberland portion | Timberland Investment | Scoop.it

CalPERS approved Tuesday night a new three-year asset allocation that maintains the $282.5 billion pension fund’s expected rate of return at 7.5%.

The new target portfolio, which is scheduled to go into effect July 1, reduces the target allocation to global equities to 47% from 50% and private equity to 12% from 14%, while increasing fixed income to 19% from 17% and real estate to 11% from 9%.

***

The allocation for inflation-sensitive securities, including commodities and Treasury inflation-protected securities, will increase to 6% from 4%, while the combined infrastructure and forestland allocation will increase to 3% from 2%. The liquidity asset class, including cash and short-term securities, will decrease to 2% from 4%.

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

CalPERS pushing on infrastructure, timber

CalPERS pushing on infrastructure, timber | Timberland Investment | Scoop.it

CalPERS is attempting to increase allocations to infrastructure investments and timber, assembling what is believed to be the largest infrastructure investment staff among U.S. pension funds.


For the $277.3 billion, Sacramento-based California Public Employees' Retirement System, expanding investments in both areas is part of a continuing effort to diversify assets, serve as an inflation hedge and provide a cash yield for the pension fund.


The initial infrastructure investments were made after the financial crisis, when executives searched for investments not correlated to plunging stocks and bonds.


CalPERS had purchased and sold some timber assets (which officials of the pension fund call forestland) before the financial crisis, but made new investments as part of the asset diversification effort in 2008. However, CalPERS executives have not made any new forestland investments in five years and instead have put more focus on increasing infrastructure assets.

***

He said his expanded infrastructure team, with expertise in transportation and power projects, is looking at power plants, airports, parking facilities and toll roads as potential investments.


Plans for expansion of the fund's forestland investments are not as advanced. CalPERS has $2.2 billion invested in timber, just two-tenths off its 1% allocation.


While infrastructure has produced overall robust returns — an annualized 18.9% for the three years ended June 30 compared to its custom benchmark of 6.7% — timber has fared poorly, producing an annualized -2.8% vs. 3.6% for the benchmark NCREIF Timberland index during the same period.


Mr. Mullan said the forestland portfolio, almost 80% of which is in the southern part of the U.S., has been severely affected by the downturn in the housing market.


Mr. Mullan said the timber program has been understaffed; until recently, there was only one staffer, working part time on the portfolio. He said an additional, dedicated employee was hired for this month, but acknowledged that might not make an immediate difference because substantial tracts of timber rarely come onto the market.


He said one option he and the new staffer will be exploring over the next year is to expand the timber program to include other investments, such as agricultural, water or other natural resources.


CalPERS is the largest U.S. defined benefit plan and one of the largest institutional investors in the world, making its consultants and executive staff question whether its allocations to infrastructure and timber are too small to make a difference in the fund's overall performance.


“Significantly, it does not really move the needle,” Allan Emkin, managing director of Pension Consulting Alliance, said at a CalPERS investment committee workshop last month. ”You're looking at a basis point in one direction or another and there's resources, there's time, there's oversight; why do it?” PCA is one of CalPERS' investment consultants.


In an interview, Mr. Emkin said he is not against starting small with infrastructure, but said it's not going to be worth it in the long term if CalPERS cannot get its allocation to at least 5%.


Mr. Emkin said he believes the same about timber.


Mr. Mullan said he agrees growth needs to occur in both asset classes. While a new plan needs to be developed for timber, he believes the infrastructure team can grow its assets substantially over the next decade.

Sam Radcliffe's insight:

OK, so timber is only .8% of the portfolio. But it's still $2.2 billion and there has been only one part-timer watching over it?

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

CalPERS to sell 20,000-acre Sonoma County forest

CalPERS to sell 20,000-acre Sonoma County forest | Timberland Investment | Scoop.it

A national conservation group has reached an agreement to buy nearly 20,000 acres of timberland in northwestern Sonoma County, a move that derails the long-disputed, forest-to-vineyards conversion project pushed by CalPERS, the giant state workers pension plan.


The $24.5 million purchase of the so-called Preservation Ranch, to be completed by the end of May, is led by The Conservation Fund, based in Virginia. It would contribute up to $6 million toward the purchase.

***

The Conservation Fund owns and manages 55,000 acres of forest in Mendocino County and would use the new property for sustainable timber production and possibly for the sale of carbon credits.

The purchase would eliminate the threat of subdivision for rural estates and commercial vineyard development.

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

CalPERS Timberland Portfolio in the Red for Last Three Years

more...
Jack D Bridges's curator insight, December 12, 2012 9:43 AM

Interesting....maybe if CALPERS stopped out-sourcing every manager decision in its portfolio, they'd save more than a few bps/year. 

 

Sure, running a pool of assets that large isn't easy, but, really? How hard is it to avoid market tops, and allocate during times of dislocation? 

Scooped by Sam Radcliffe
Scoop.it!

Calpers to Cut External Money Managers by Half

Calpers to Cut External Money Managers by Half | Timberland Investment | Scoop.it
Only the group that invests in timber and infrastructure projects like roadways is expected to rise, from about six managers to 10. Some 15 slots will go to upstart firms that Calpers plans to identify over the next several years.
more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

Calpers Reviews Its Timber Holdings

Calpers Reviews Its Timber Holdings | Timberland Investment | Scoop.it
The California Public Employees Retirement System is reviewing its timber holdings following a period of poor performance and questions about whether the investments are large enough to impact overall returns for the nation’s largest public pension fund.

Top investment officers and consultants to the system known by its abbreviation Calpers discussed the $2.3 billion commitment at a board meeting Monday. One consultant, Wilshire Associates managing director Andrew Junkin, hinted at the review in an Oct. 22 letter to Calpers investment committee chair Henry Jones that cited the portfolio’s “structural weaknesses” and an evaluation of its “efficacy.”

A Calpers spokesman said no decisions have been made about the future of the timber portfolio. “This process has just begun,” he said via email.

Forests valued for their timber are Calpers’ worst-performing asset since the financial crisis, with returns down .8% over the last five years and 1% over the past three years. The portfolio gained 2.5% during the 2014 fiscal year but that was well below internal goals and industry averages.

Calpers is one of the largest holders of timber in the U.S. and owns 1.46 million acres, according to Forisk Consulting LLC. But one problem identified by Mr. Junkin is that these holdings are entirely concentrated in one part of the country — the U.S. Southeast. Outside the U.S. Calpers also owns properties in Brazil, Guatemala and Australia. The forests are also struggling due to the “timing of the original purchases,” according to the letter.

The size of the program presents another challenge. The holdings represent roughly 1% of total assets at Calpers, which were $296.4 billion as of Nov. 13.

“It could be argued” the current allocation “is not large enough to have a significant impact,” Mr. Junkin said in his letter. At the same time, “it would be massive challenge” to increase the size of the timberland holdings “to something more impactful, say 5%.”
more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

CalPERS earns 4.9% on timber in 2013

Sam Radcliffe's insight:

The retirement fund missed its timberland benchmark (NCREIF) by quite a bit.

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

CalPERS infrastructure outperforming benchmark over the long term, while forestland trails

CalPERS infrastructure outperforming benchmark over the long term, while forestland trails | Timberland Investment | Scoop.it

CalPERS’ annual review of its infrastructure and forestland programs shows the fund’s infrastructure program has outperformed its benchmark by 130 basis points annually since the program’s inception, while its forestland investments trailed the NCREIF Timberland index by 380 basis points from its inception.


Through March 31, the latest returns available, CalPERS’ infrastructure investments returned 8.1% annually from inception, 13.9% over five years, 17.6% over three years and 5.7% over the one-year time frame. In each period, returns were above the benchmark of CPI plus 400 basis points.


Annualized forestland returns of 0.6% (from inception), -1.1% (five years), -2.5% (three years) and 6.5% (one year) trailed the NCREIF Timberland index in each period.

more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

CalPERS, UC Davis launch research initiative to study impact of sustainability factors on investments

CalPERS, UC Davis launch research initiative to study impact of sustainability factors on investments | Timberland Investment | Scoop.it

The California Public Employees’ Retirement System (CalPERS) today launched, in partnership with University of California, Davis, the Sustainable Investment Research Initiative (SIRI). The initiative is an effort to drive innovative thought leadership that will inform and advance the organization’s understanding of sustainability factors and the impact they have on financial performance.


Today’s launch also marked the start of a Call for Working Papers from scholars and investment practitioners globally in the fields of finance, economics, accounting, law and business. The papers will contribute to a rigorous debate and discussion on the impact of environmental, social, and governance (ESG) issues on long-term value creation and capital market stability.

***

In 2011, the CalPERS Board approved integrating ESG issues as a strategic priority across its investment portfolio. It is grounded in the three forms of economic capital – financial, human and physical – that are needed for long-term value creation, according to the pension fund’s 2012 report, “Towards Sustainable Investment.” SIRI will provide independent evaluation and insight for CalPERS sustainability strategy, as well as contribute to the larger debate.



more...
No comment yet.
Scooped by Sam Radcliffe
Scoop.it!

CalPERS eyes expanding timber portfolio's U.S. reach

CalPERS eyes expanding timber portfolio's U.S. reach | Timberland Investment | Scoop.it

CalPERS' investment consultant is recommending that the $234.3 billion retirement system broaden its timberland program beyond the southern U.S. to other parts of the country.

more...
No comment yet.