CalPERS is selling 92 properties with a market value of roughly $2.8 billion in what could become the largest single shopping center portfolio offering in history. The news was first reported in Real Estate Alert on January 19. The portfolio includes 12.7 million sq. ft. of shopping center space that is scattered throughout the U.S. The portfolio is expected to yield a 6% cap rate, according to REA.

While the pension fund will consider bids for the whole portfolio, sources believe that it will ultimately be sold to multiple buyers. Pension funds, REITs, foreign investors and private investors are expected to bid on the properties, most of which are located in the mid-Atlantic region.

"Retail has had such a great run. But the real question for CalPERS is where they reinvest the capital," says Bret Wilkerson, chief executive officer at Property & Portfolio Research. Indeed, a strong sellers’ market has driven prices through the roof while knocking down yields. This suggests that CalPERS—which recently lowered its allocation towards real estate—could be challenged to deploy sales proceeds into other retail properties.

Foreign investors—especially Australian property trusts—are strong contenders to snap up some of this portfolio, says Wilkerson. He doubts that European investors will be competing for any of the properties despite the increasingly weak U.S dollar.

"We recently talked to a European investor who came to visit the U.S. He told us that ‘real estate is on sale’ in this country," says Wilkerson, referring to the currency arbitrage. But European capital hasn’t flooded the retail market over the past 18 months. Instead it’s focused on CBD office properties, and Wilkerson doesn’t expect that to change.

"These properties fall outside the box for European investors," he says. Most of the properties are located in Washington, DC, Maryland, Pennsylvania and Virginia. The remaining properties are spread across California, Florida, Illinois, Minnesota, Colorado and Texas.