Pension funds who had been hit hard by the downturn in real estate are apparently venturing back into the asset class. The Wall Street Journal reported today that Cadillac Fairview Corp., which is owned by Ontario Teachers’ Pension Plan, bought a 49% stake in Queens Center Mall from Macerich Co., a client that I have represented in the past in connection with debt offerings. Cadillac paid $150 million in equity and assumed $167 million in debt.
This is fairly significant news in that pension funds are major players in the real estate market and getting them back into the game will be a major boost for commercial real estate. Also noteworthy is the fact that they invested in retail properties which is an asset class that has been and will continue to be hit very hard by the current recession. This purchase, along with a $463 million investment made by California Public Employees’ Retirement System in a portfolio of 86 shopping centers, is a very positive indication. These could very well be anomalies, but with the market the way it currently is any sign of hope is good. I’m going to keep monitoring these developments and keep you posted of any new positive signs.