The fund will be managed by a partnership of the three firms:New Faze Development, a smart-growth development firm based inSacramento that will contribute land to the deal; MacFarlanePartners, a San Francisco-based real estate investment manager with$9 billion of assets under management; and Seattle-basedWeyerhaeuser Realty Investors, which has been investing insingle-family housing developments since the 1970s.

"We see this investment as important recognition of the rapidlyescalating values of infill development across California," saysCalPERS portfolio manager Jose McNeill.

CalPERS is investing $56 million in the fund, with the threeco-managers contributing a total of $17 million. Operating as NewFaze Investment Fund I, the new partnership is expected to developjust over 2,000 housing units and residential lots worth anestimated $600 million. A source with MacFarlane tells GlobeSt.comthat about 15% of the units will be attached.