UNITED STATES - The two largest pension funds in the United States have seen their real estate holdings plummet in value over the last year, as the California State Teachers Retirement System's property portfolio dropped by 43% in 12 months, while CalPERS lost over a third in a year to the end of March.
CalSTRS' pension fund real estate assets were valued at $13bn (€9.2bn) at the end of June, having been valued at $20.8bn just 12 months earlier.
At the same time, its larger Californian partner, the $185bn California Public Employees' Retirement System (CalPERS) said its real estate holdings lost 36% over the 12-month period ending 31 March 2009.
CalSTRS lost money in part because officials decided to record or write down the value of its worldwide real estate holdings in a single year - a move which might have seen other investors spread out the losses over several years.
CalSTRS chose to take the write-down in one-year to place them in a better position to make decisions going forward and take fresh investment opportunities as they arise, according to Christopher Ailman, chief investment officer for CalSTRS.
"We are now in a position to turn around our real estate returns with new creative strategies."
The most recent value of its real estate portfolio means that CalSTRS now has invested 11% of its $118.8bn of total plan assets in real estate, though this is still below the targeted allocated of 13% for real estate.
CalPERS said it also suffered a 20.9% decline on its inflation-linked assets, which include infrastructure and forestry.