The boost came "in response to attractive opportunities in markets with strong economic growth, high employment, projected population and employment growth and attractive demographics and demand," the briefing said.
The loss in value includes a portion of CalPERS' $970-million majority stake in the failed LandSource Communities Development, which was developing a 15,000-acre tract near Santa Clarita.
The fate of the property, known as Newhall Ranch, rests with a federal bankruptcy judge.
CalPERS is likely to try to hold on to its other housing investments in hopes that they eventually recover in value, Eliopoulos said.
"CalPERS is uniquely positioned with both a long-term investment horizon and also substantial assets," he said. "So we can afford to wait out bad market cycles and not be forced to sell into a down market."
In the meantime, the fund and its consultants are reviewing its participation in dozens of real estate partnerships.
"We intend to keep the vast majority of our assets, and our long-term horizon enables us to be patient," said investment committee Chairman George Diehr. "If the market values increase over time, we can expect cash flow back and a return on our capital."
That's probably a good strategy, because "selling would just exacerbate the negative return, and there may not be better alternatives," said Painter of the Lusk Center.
CalPERS' experience is an important lesson about "doing a little more homework" before getting caught in a real estate bust, said Molly Carmichael, a senior vice president at John Burns Real Estate Consulting in Irvine.
"I think CalPERS can be smarter in the long run," she said.
"Hopefully, they really can scrub the market and get under the hood and find out what's going on. They need someone to come in and give them an action plan about what to hold and what to sell."
--
marc.lifsher@latimes.com
