Source: Bloomberg
The California Public Employees’ Retirement System, the largest U.S. public pension fund, may sell part of its $2 billion in residential land holdings after the investments lost 31 percent last year amid falling home prices and forecasts of further declines reports Bloomberg.
Sacramento-based Calpers hired Morgan Stanley to review seven land deals it made with joint-venture partners and real-estate advisers, said fund spokeswoman Pat Macht. The fund may decide to sell some of the land, purchased to develop new homes, or renegotiate the partnerships.
“Calpers is doing a case-by-case review, and of course there could be some restructuring,” Macht said in an interview. “There could be some selling. We could hold some. As each partnership is reviewed, there could be a variety of dispositions.”
July 31st, 2008 at 10:38 am
If Calpers, a large pension fund manager, is looking to sell or restructure their land holdings, what does this signal for the smaller investor in real estate?
I think real estate developers are going to have a harder time securing investors for their projects.
What we are going to see is widespread stagnation in land development.
July 31st, 2008 at 10:39 am
I concur. If real estate developers cannot secure investors then they will not have the equity in place to form the deal, which then means they won’t be able to qualify for construction loans. Stagnation, indeed.
July 31st, 2008 at 10:42 am
I disagree. No need to be alarmist. Calpers is considering restructuring, which means they aren’t going to automatically sell. Investors are still investing. Perhaps at lower amounts but they are still investing. We are heading for possibly a decreae in real estate development but not widespread stagnation.