US - The market value of the US$189bn California Public Employees' Retirement System (CalPERS) housing portfolio has been reduced by 35% to $6.1bn.
The market value of its housing assets stood at $6.1bn as of 30 June 2008, down from its original cost of $9.3bn. This $3.2bn reduction represents a 35% decline in market value of the fund's housing portfolio.
For the one-year period, the housing decline put the real estate portfolio into negative territory. However, CalPERS pointed that real estate had made a positive return for the three-year, five-year, and since inception periods.
CalPERS chair of the investment committee George Diehr said the portfolio reflected the realities of today's market and depicted readjustments of price and risk.
He said: "We intend to keep the vast majority of our assets and our long-term horizon enables us to be patient.
"If the market values increase over time, we can expect cash flow back and a return on our capital."
So far, CalPERS has valued existing properties, analysed the capital structure of the programme, restructured certain outstanding debt arrangements and reduced leverage.
CalPERS interim chief investment officer Anne Stausboll said the board began in January 2007 to enhance the entire real estate programme's policies, processes and protocols to ensure they were appropriate for the economic conditions going forward.
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