CalSTRS' real estate investments lost $500 million in the six months ended Sept. 30, the system's investment committee was told Thursday.
The real estate portfolio of the $132.6 billion California State Teachers' Retirement System, West Sacramento, totaled $12.4 billion as of Sept. 30.
Micolyn Yalonis, principal of the Townsend Group, the system's real estate consultant, said in a presentation to the committee that the losses were attributed to the portfolio's heavy weighting toward non-core investments.
“These investments have been extremely susceptible to this market decline, particularly due to the negative effect of leverage, and have significantly impacted the portfolio's performance,” she said.
The system's $8 billion in non-core real estate investments returned -49.1% for the year ended Sept. 30, 30 percentage points below the custom benchmark of -19.1%. The $4.4 billion core portfolio returned -34.8%.
The non-core portfolio showed a gain of 0.8% in the quarter ended Sept. 30, while the core portfolio returned -3.6%, Ms. Yalonis added.