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Calpers to unload “higher-risk” housing assets, invest in commercial property instead

February 15, 2011 12:45PM

The California Public Employees’ Retirement System, the largest U.S. public pension plan otherwise known as Calpers, is shifting its strategy away from residential real estate investments after getting badly burned on several boom-era housing deals, Bloomberg News reported. Perhaps the most infamous of those deals was New York City’s Stuyvesant Town and Peter Cooper Village, in which Calpers lost a $500 million stake after the complex was turned over to creditors last year. Yesterday, the pension fund’s investment committee voted to move roughly half of its real estate investments from “higher-risk” assets like housing into commercial property, to avoid falling victim to real estate booms and busts in the future. Unlike in residential real estate, said Tony Oliveira, vice chairman of the committee, commercial real estate downturns are “not busts, they’re adjustments.” The strategy shift will involve selling high-risk assets while buying up commercial property over the next five to seven years. Calpers, whose assets are now valued at around $228 billion, lost 11 percent of its property portfolio’s value over the past year. [Bloomberg]