CalPERS’ real estate investments loses 35 percent in a year

The country’s largest public pension fund suffers a paper loss of $3.3 billion for the year ended June 30. An analysis says the loss was amplified by loans taken to ramp up the investments.

November 13 2008 - The value of residential real estate investments owned by the country’s largest public pension fund has plummeted 35% — a paper loss of $3.3 billion for current workers, retirees and their state and local government employers.

The California Public Employees’ Retirement System (CalPERS) reported Wednesday that in the year ended June 30 its real estate portfolio declined to $6.08 billion from $9.36 billion, based on 461 independent appraisals of its investments in 288,000 housing units across the country.

The decline in real estate represents a portion of CalPERS losses since the fund hit a high of $247.7 billion on June 30, 2007. It fell to $239.2 billion a year later and since then has plunged a further 23%, to $184.2 billion as of Monday.

CalPERS provides pension benefits for 1.6 million current and former employees of the state and many local governments and school districts. Those employers, which are suffering from strained budgets, could be forced to increase their contributions to the pension fund if CalPERS’ investment performance does not turn around in the next couple of years.

“It’s certainly frightening for those who look forward to getting their pensions from the California system,” said Gary Painter, director of research at the Lusk Center for Real Estate at USC.

CalPERS’ housing portfolio loses 35% in a year
by Marc Lifsher | Los Angeles Times