CalPERS Allocates $2B of Additional Capital for Retail Partnership with First Washington

CalPERS, California Public Employees Retirement System, First Washington Realty, Seattle, San Diego, Sacramento, Portland, Costa Mesa, Global Retail Investors
Photo by Atoms on Unsplash

By Jon Peterson

While the retail sector has been one of the hardest hit during the global COVID-19 pandemic, there are signs that perhaps the worst has come to pass for this part of the commercial real estate market. In a major show of confidence for retail, California Public Employees Retirement System has approved a new $2 billion commitment to its Global Retail Investors partnership, according to a board meeting document from the pension fund. The manager of this relationship is First Washington Realty based in Bethesda, Md. The company declined to comment when contacted for this story.

First Washington has been active in the CalPERS relationship on the West Coast from Seattle to San Diego as well as in other markets nationwide. The company funnels its investments in the West through the regional offices that it has in Portland, Sacramento, Costa Mesa and San Diego, according to its website.

The new commitment from CalPERS will allow the pension fund to more than double the value of the partnership in the future. The pension fund last placed a value on Global Retail Investors at $2.7 billion last year, according to information provided by the pension fund.

CalPERS is one of a limited number of major public pension funds in the United States that has chosen to increase its exposure to retail assets. Most pension funds have and will continue to look for ways to lower their overall exposure to retail assets, according to industry sources.

Global Retail Investors, however, has a specific focus, which is to invest in properties that are considered to be necessity-oriented retail and shopping centers on a nationwide basis in the United States. It will be buying existing core assets only.

The national retail picture has been strong in 2022, although some macro economic headwinds may be slowing the growth of the sector, as well. According to a recent report by The Balance, U.S. retail and food service sales were down 0.3 percent month-over-month in May 2022. However, sales were up year-over-year by 8.1 percent, overall. 

Clothing and accessory sales saw an increase of 6.1 percent annually, according to the report, while sporting goods, hobbies, musical instruments and bookstores saw a dip of 0.2 percent year-over-year.

Drug stores, which include health and personal care stores, saw an increase of 4.8 percent year-over-year, while building and garden supply stores grew 6.4 percent yearly.

Restaurant and bar sales were up 17.5 percent from last year, and food and beverage stores were up 7.9 percent from a year ago.

And while car and parts dealers saw a decrease in sales of 3.5 percent month-over-month, they had an overall increase of 7.9 percent from 2021. Increased gas prices rang up gas station sales by 4 percent in May of this year and up 43.2 percent since May 2021.