The valued housing assets are spread among 20 investment partnerships. CalPERS housing partners include Hearthstone, IHP Capital Partners, McFarlane/Weyerhaeuser Partners, Newland Capital Advisors, Resmark Equity Advisors, and Wells Fargo Reality Advisors.

The declining value's impact on performance was also reported to the Committee. The decline in value indeed pushed the portfolio into negative territory for the year but current gains in the 12-month period ended June 30, 2008, have reportedly offset that decline. CalPERS overall real estate portfolio generated positive returns for the three-year, five-year and since-inception periods, according to the report.

"This portfolio reflects the realities of today's market and accurately depicts readjustments of price and risk," said George Diehr, chair of the Investment Committee. "We intend to keep the vast majority of our assets and our long term horizon enables us to be patient. If the market values increase over time, we can expect cash flow back and a return on our capital."

CalPERS said its Investment staff has not only valued the existing properties but also analyzed the capital structure of the program, restructured certain outstanding debt arrangements, and reduced leverage "where appropriate". Assisting the Investment staff were LePlastrier Development Consulting and Morgan Stanley.

CalPERS is the nation's largest public pension fund with more than $189 billion in assets. It provides retirement and health benefits for approximately 1.6 million public employees, retirees and their families.