Somebody’s learned to eat a share of his humble pie.
Last Month, the California Public Employees’ Retirement System (CalPERS) , the state’s agency that provides “retirement and health benefits to more than 1.6 million public employees, retirees, and their families and more than 3,000 employers”, has experienced its largest blow when its losses on real estate investments ballooned to $600 million. They can give the credit to the infamous Stuyvesant Town and other doomed projects like the Peter Cooper Village and a building complex in East Palo Alto, CA. Then the San Francisco Gate reports that the benefits provider pulled out of a real estate investment last March because the “$800 million Boston condo and hotel complex, called the Columbus Center, which, as reported last week, was on the verge of default.”
It’s a good thing that the agency has learned its lesson already (I suppose that’s what $600 million can do).
The Associated Press reports that the nation’s largest pension fund is shifting its investment strategy into something that embraces “investing in real estate to balance its socially responsible investment philosophy with its quest for profits.” The report also adds, “The revised policy, adopted at a CalPERS board meeting Monday, says the fund will not participate in investment strategies that rely on eliminating rent-regulated housing or raising rents above regulated levels… ‘The intent is to prevent us from investing in those strategies that are not well intended and had tenant impacts that were unacceptable to staff,’ Laurie Weir, CalPERS’ real estate portfolio manager, told the board. ‘We really are trying to prevent those tenant impacts that we have seen over the past year.’”
I applaud the agency for committing itself to worthy investments for the community in general. After all, its billion-dollar portfolio definitely reflects its reputation being a part of the California executive branch in the first place. Public pension funds must be really geared towards real estate projects that serve well for the community.
Andy Denton is the COO of www.Realty.com. Realty.com is a real estate search portal, dedicated to connecting home buyers and sellers to trusting real estate services. Follow the Realty.com blog for up to date housing news and trends. And monitor local mortgage rates at RealtyGadget.com.
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