11.14.2008

CalPERS admits: Varones was right! We were lying about performance!

In July, the W.C. Varones Blog was the first to report that CalPERS was lying about its performance numbers, making fantastic claims that the real estate bubble was still inflating! As I wrote then,
What a coincidence. While things that have easily observable market prices (i.e. stocks) went down, everything that is valued subjectively went up! Private equity? It does great during a credit crunch when stocks are crashing! Just ask noted private equity players Blackstone Group or Babcock & Brown. And real estate? Well, whose real estate portfolio is not up at least 8% this year?

Nice numbers, CalPERS! Especially considering your investment in toxic waste CDOs at the beginning of the mortgage crisis, and your $1 billion dollar investment in the now-bankrupt LandSource at the peak of the real estate bubble.

Mark my words: CalPERS is lying about its performance, and there will be serious consequences for California retirees and taxpayers.


Now, after independent appraisals, CalPERS admits it was lying.
The value of residential real estate investments owned by the country's largest public pension fund has plummeted 35% -- a paper loss of $3.3 billion for current workers, retirees and their state and local government employers.

The California Public Employees' Retirement System reported Wednesday that in the year ended June 30 its real estate portfolio declined to $6.08 billion from $9.36 billion, based on 461 independent appraisals of its investments in 288,000 housing units across the country.

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