Calpers takes big hit

This is what can happen when you bet too heavily in real estate. The nation's largest public pension fund has seen the value of its land and housing projects fall to about $6.1 billion, as of June 30, down more than $3 billion from their original cost. The number is likely to be even steeper by now because the appraisals are more than six months old. Much of the loss centers on the disastrous land investment in the Santa Clarita Valley that used to be owned by Newhall Land and Farming. From the WSJ:

Calpers says it has restructured many of its deals and expects to hold on to most of its land. As a long-term investor, "we have size and capacity to hold assets for the long term," Theodore Eliopoulos, the senior investment officer who oversees real estate, said. In some cases, Calpers may have little choice but to hold on to the land because a sizable portion of the debt on the projects -- about $1.7 billion -- was recourse to the pension fund. That means that in the event of a foreclosure, Calpers would likely still be on the hook to pay back the debt, making it costly to walk away from its investments.

Reuters also has a story.