CalPERS discloses $250 million realty loss

Published Thursday, Jan. 19, 2012

CalPERS took a $250 million loss on a massive land deal as it continues to reposition its battered real estate portfolio, the pension fund said Wednesday.

The sale of a coast-to-coast string of housing developments is the latest move by CalPERS to overhaul its real estate holdings in the aftermath of the housing market crash.

The pension fund agreed to sell its share of 28 different housing developments to the U.S. arm of Japanese home builder Sekisui House Ltd.

CalPERS' partner in the investment, Newland Real Estate Group of San Diego, is keeping its share and has formed a partnership with Sekisui. The pension fund has been doing business with Newland since 1995 and still has some investments with the San Diego firm, said CalPERS spokesman Wayne Davis.

The sale includes 16,000 unbuilt home sites and 5,800 acres of land available for commercial use. Four of the developments are in San Diego and Riverside counties; the rest are spread across the country.

Brad Pacheco, another CalPERS spokesman, said the pension fund lost $250 million on the sale.

Despite the loss, the California Public Employees' Retirement System made the deal because it's trying to restructure its real estate holdings, Davis said.

CalPERS bet heavily on the housing market and lost about $9 billion in the crash. It lost $900 million on one deal alone, a Los Angeles-area housing development called Newhall Ranch.

Since then, the fund has adopted a new strategy that de-emphasizes risky investments like housing developments. Instead, it's putting money into safer projects like leased-up shopping centers and office buildings.