RCA in the commercial property press:

California Public Pension Funds Take New Hits On Real Estate Investments

Sacramento Bee reports: Troubles in real estate and other sectors are straining the state and local government entities that rely on CalPERS and CalSTRS pensions. The California Public Employees' Retirement System is imposing rate hikes on state and local governments to help it recover from its investment losses. CalSTRS, which needs permission from the Legislature to raise rates, is preparing to introduce a bill next year.

Additionally, both funds are considering lowering their official forecasts of future investment returns, which could increase the funding pressure on state and local governments.

Real estate could be the biggest trouble spot for the foreseeable future. Ben Thypin, senior market analyst with New York consultant Real Capital Analytics, said all big real estate investors are continuing to struggle with post-bubble economics.

"I don't think it's going to get much worse," he said, referring to the market in general and not the California pension funds' investments. "That doesn't necessarily mean there won't be other bombshells."

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Posted by: Mark Alferman

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