CalPERS and Macquarie in tit for tat property deal

Global Retail Investors (GRI), a joint venture between the $188 billion CalPERS and First Washington Realty has bought a large portfolio of shopping centres from Macquarie CountryWide Trust, a realestate portfolio the joint venture largely sold to Macquarie nearly five years ago.

The deal sees an option for GRI, which is majority owned by CalPERS, to purchase up to 75 per cent of the 86
property portfolio in a three-phase process over two years, for a gross sale price of $1.3 billion.

GRI sold 65 per cent of a real estate portfolio that contained largely the same properties, to Macquarie
CountryWide Trust and Regency Centers in February 2005 for $1.8 billion, as part of a large deal that saw Macquarie purchase a $2.79 billion portfolio of shopping centres.

The first phase of this latest sale process has been completed with GRI purchasing a 45 per cent interest in the portfolio for a gross sale price of $778.5 million; with the second phase seeing a sale of 20 per cent for $346 million with 15 per cent being sold to GRI and 5 per cent being sold to either Regency or GRI.

The third phase involved Regency having an option to purchase the Macquarie trust’s remaining 10 per cent interest in the portfolio, or if that is not exercised that stake will be offered to GRI for up to three months.

The portfolio of shopping centres covers 17 states as well as the District of Columbia, with 16 of the grocery store-anchored shopping centres in California.

Senior investment officer, CalPERS real estate, Ted Eliopoulos, said the purchase was a great example of
opportunities starting to opening up.

This is a preview of what our program will look like as we pursue even more core, cash-yielding
properties at attractive prices, he said.

CalPERS and First Washington have been acting as joint venture investors since 2001 when CalPERS
bought the First Washington Realty Trust, a publicly-held real estate trust
traded on the New York Stock Exchange.

Now First Washington serves as advisor and joint venture investor with CalPERS in connection with the
acquisition, development, ownership and financing of shopping centres worldwide. It also continues to provide shopping centre services to other third party clients.

For the Australian-based Macquarie, the decision to sell what will constitute 80 per cent of the CountryWide trust’s US assets is part of a comprehensive strategy to reduce gearing, mitigate near-term refinancing risk, enhance balance sheet strength and re-weight the portfolio towards Australia
and New Zealand.