CalPERS Confronts Huge Housing Losses

Public Fund Faces Billions in Lost Value After Aggressive Push Into Real Estate

NOVEMBER 13, 2008 - The nation’s largest public pension fund, known as CalPERS, is paying dearly for its ill-fated decision to become one of the most aggressive real-estate investors among public pensions.

Amid the rapid decline in the housing market, the value of Calpers’s investments in land and housing projects across the country had fallen 35%, to about $6 billion, as of June 30, according to recent performance results released Wednesday by the California Public Employees’ Retirement System.

The losses are likely to be larger now because the values were based on appraisals completed at the end of March. Since then, land values have cratered nationwide, as evidenced by the bankruptcy-protection filing of one high-profile Calpers undertaking, the LandSource land venture in California. An investment vehicle funded by Calpers sank $970 million in that venture, which holds 15,000 acres outside Los Angeles.

REAL ESTATE - Calpers Confronts Huge Housing Losses
by MICHAEL CORKERY | Wall Street Journal