UNITED STATES - San Francisco City and County Employees' Retirement System is slowing down its real estate decisions to match the state of the US market and will make very selective investment decisions for the rest of the year.

The pension fund had earmarked $100m to be invested in real estate by April 2009, but new investment opportunities will now only be considered on a very selective basis as pension fund officials feel they need to react to the slowdown in the US property markets and the global credit crunch.

San Francisco City and County is not totally shutting down to the prospect of real estate investments as its real estate consultant, The Townsend Group, will continue to present ideas considered to be both sustainable and fully-underwritten with solid market research.

One area which has caught the attention of the pension fund is distressed debt as officials believe there could be investment opportunities in this and emerging markets over the next 18 months, as the markets and the financial situation continues to weaken.

Emerging markets could offer pension funds the opportunity to invest in smaller countries where there are solid growth patterns for the future.

In contrast, SanFran City and County will probably not invest any further capital in apartments or industrial properties as these two property types already amount to 66% of the pension fund's existing real estate portfolio, albeit pension fund officials believe these two property types deliver stable occupancies at present and have created positive cash flows.

San Francisco City and County had total plan assets to the end of June of $15.8bn while its real estate portfolio was valued at $1.9bn.