CalPERS may sell some residential land holdings amid big losses

The California Public Employees Retirement System, the largest U.S. public pension fund, may sell part of its $2 billion in residential land holdings after the investments lost 31% last year amid falling home prices and forecasts of further declines.

Sacramento-based CalPERS hired investment bank Morgan Stanley to review seven land deals that it made with joint-venture partners and real estate advisors, fund spokeswoman Pat Macht said. The fund may sell some of the land, purchased to develop new homes, or renegotiate the partnerships.

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One of the CalPERS ventures under review is LandSource Communities Development, a 15,000-acre tract north of Los Angeles known as Newhall Ranch, which filed for Chapter 11 bankruptcy protection Sunday after failing to restructure its debts with lenders. CalPERS paid $970 million in cash and property to home builder Lennar Corp. through advisor MacFarlane Partners for 62% of the development in January 2007.