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New York Common's real estate portfolio losses 32%

The New York State Common Retirement Fund has assets valued at $110bn, down from $154bn about a year ago, due in part to a 32.6% decline in the value of its real estate portfolio.

The value of the assets of the New York State Common Retirement Fund declined about $44 billion during the fiscal year period ending 31 March 2009.

The fund totals $109.9 billion, down from its most recent value of about $122 billion and its value a year ago of $153.9 billion. Contributing to the loss was a 32.6 percent loss in the fund' real estate portfolio, a 22.9 percent decline in the value of private equity investments and an 18.8 percent drop in the value of the fund’s absolute return holdings.

“In today’s economic environment, the temptation for some investors may be to run and hide,” New York state comptroller Thomas DiNapoli, who is in charge of the pension, said in a statement. “We have the liquidity and the right investment programmes in place to take advantage of attractive opportunities. We’ve been through difficult markets before and we are well prepared to continue pursuing sound investments that will help the fund rebuild stronger than ever.”

DiNapoli said the fund lost money because of the global economic crisis, “which drove the major US stock indices down between 33 and 40 percent”. He added that the fund will need higher employer pension contributions in future years.

“As a long-term investor, [the fund] is built to survive even the most challenging investing environments,” DiNapoli said.

New York Common has an actual allocation to private equity of 9.9 percent, with 6.4 percent to real estate and 2.2 percent to absolute return.

About 42 percent of the fund’s assets are allocated to publicly traded stocks, which were battered in the market downturn. The fund experienced an asset decline of about $30 billion when the markets melted down after the dot-com bust and the 11 September, 2001 terrorist attacks, he said.

New York Common is in the process of reviewing its alternative investments and its allocation to each asset class, DiNapoli said during a press conference Friday. While the review could bring changes to the private equity programme, DiNapoli said the pension is committed to long-term investments.

He declined however to outline specific funds’ performances, stressing the pension is currently part of an investigation involving New York’s attorney general’s office and the US Securities and Exchange Commission. The situation “requires us to be very careful in the information we give out at the moment,” DiNapoli said.

Andrew Cuomo, New York’s attorney general, has charged six people so far in a scheme to collect sham finder’s fees from investment firms looking for commitments from the pension. Henry Morris, a former political operative with former New York comptroller Alan Hevesi, David Loglisci, former chief investment officer of New York Common, are alleged to be the masterminds behind the scam.

Also charged are Barrett Wissman, former head of a hedge fund, Raymond Harding, former head of the New York Liberal Party, Julio Ramirez, a former executive with Blackstone-affiliated placement agent Park Hill and Saul Meyer, founder of financial consultant Aldus Equity.