It's official: CalPERS loses $500 million on New York apartment deal

[FarCenter]

http://latimesblogs.latimes.com/money_co/2010/01/money-cocalpers-loses-500-million-on-new-york-apartment-deal.html
January 25, 2010 | 10:37 am
The California Public Employees' Retirement System officially has lost a $500-million stake in the biggest deal ever in the U.S. for a single piece of residential property.

The owners of Stuyvesant Town and Peter Cooper Village, a complex of 56 buildings with 11,000 rental units near the East River in Manahattan, have agreed to turn the property over to creditors after defaulting on $4.4 billion in debt.

CalPERS had committed 26.5% of the partnership led by Tishman Speyer Properties and Black Rock Inc., one of the fund's real estate investment advisors. "This was one of our investments when the real estate market was peaking during 2005 and 2006," said Clark McKinley, a CalPERS spokesman. "Performance was negatively affected by the aftershock of the market collapse."

CalPERS wrote its Stuyvesant stake down to zero in March, said Chief Investment Officer Joseph Dear. "There were negotiations about how it terminates, but we didn't expect to receive any value on that."

The loss in the New York City apartment market was the most spectacular blowup in what had been a horrendous 2009 for the $200-billion CalPERS. The fund's real estate portfolio dropped by 47.5%, spurring CalPERS to terminate its relationships with some real estate advisors and to write down many of its holdings to market values.

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Apparently there weren't equivalently attractive real estate deals in California?

[Warpy]

1. Perhaps they realized what was happening in California

which is why the slightly more stable northeast corridor looked more attractive.

Ooops.

[FarCenter]

2. It's kind of ironic that CA employees retirements depended on busting New York City rent controls

The deal would be profitable for CALPERS and other investors only if Tishman-Speyer and Blackrock Realty could succeed in converting the rent-controlled apartments of this large, middle-class enclave into market-rate, up-scale apartments for the Wall Street bankers and other lower Manhattan fat cats.

[MercutioATC]

3. Obviously, $500M is a lot of money.

...but the loss on this deal only represented 1/4 of one percent of their total holdings.

[bridgit]

4. CalPERS is he-uge, they're practically ginormous

[MercutioATC]

5. Apparently.

I had no idea it was THAT big.

[FarCenter]

6. They dropped from $250 B to around 165, and are back up to 200

[proud patriot]

7. eek

x(

[Quantess]

8. Reminds me a little of a story line in The Sopranos.

I wonder if corruption is a factor?