Calpers May Fire BlackRock as an Advisor After StuyTown Debacle

It is amazing that Calpers is still listening to BlackRock after the advice they have been given over recent real estate deals. Now they are contemplating removing BlackRock as an advisor the huge Californian retirement fund.

When you are in a position to lose $500 million in one investment they steered you into, that being the Stuyvesant Town – Peter Cooper Village purchase, you are probably smart to re-assess ones advisors.

3 years ago the BlackRock team was sitting on top of the world. They were part of every major deal in the commercial real estate community. Now with a string of setbacks the company may be facing a very tough road back to credibility.

The $500 million sunk into the Manhattan complex by the California Public Employees’ Retirement System is widely considered worthless, an embarrassment for BlackRock as Calpers reviews its ties to outside firms that gave it advice on real-estate deals. The pension fund’s real-estate program was down 48% in the latest fiscal year; the fund’s overall decline was 24%.

In addition to vetting the deal for Calpers, a venture led by a BlackRock unit and Tishman Speyer Properties bought the 11,200-unit complex in 2006 in a near top-of-the-market deal valued at $5.4 billion. It is now teetering on default. As a result, it is “a strong possibility” that Calpers will decide to get rid of BlackRock as a real-estate adviser, according to a person familiar with the fund’s thinking. Calpers, which pays BlackRock a base fee plus a performance fee, paid the firm $12.6 million in real estate advisory fees last year. via the WSJ

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Calpers May Fire BlackRock as an Advisor After StuyTown Debacle