UNITED STATES - San Francisco City and County Employees' Retirement System saw real estate portfolio fall by 5.6% during the fourth quarter of 2008 alone.

The market value of its real estate assets now stands at $1.8bn (€1.38bn) though this does not include some unfunded commitments the pension fund holds, such as the $37.5m allocation to the CapMark High Return 50/50 Co-Investment Partnership in autumn 2008.

During discussions at its 10 March board meeting, officials suggested the falling value of real estate portfolios will be a common theme for US pension funds looking at Q4 results, and the expectation is this will continue to be the case at least into the first quarter of this year and longer.

San Francisco City and County found its global REITs portfolio was among the weakest performing portion of its real estate holdings.

European Investors and ING Clarion Real Estate Securities yielded a -27.9% return for the quarter though officials claim this was better than the global REIT benchmark which delivered a -32.4% return.

The pension fund produced a -14.5% return on its entire portfolio in the last three months of 2008 and its total plan assets now at $12.2bn.

The status of the pension fund means its real estate allocation is now overweight - as is the case at many other pension funds - without making any new investments and now makes up 14.5% of the pension fund's total portfolio against a target allocation of 12%.

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