North Carolina Retirement System reports $17bn asset fall

The tenth largest pension fund in the US has reported a 5.6% fall in returns for real estate in 2008, but the sector still outperformed other asset classes.

The North Carolina Retirement System, one of the largest limited partners in the US, is bracing itself for tougher times ahead after seeing its assets fall by $17 billion to $60 billion in 2008.

Janet Cowell, state treasurer and chief investment officer of the pension fund, which has a real estate portfolio valued at $4.2 billion as of 30 June 2008, said retiree benefits were safe despite the asset value fall. But she said that the fund’s investment strategy would be reviewed going forward.

It is too early to determine what impact this will have on the fund’s future commitment to real estate. In 2008, the sector returned -5.6 percent but this was a small loss in comparison to the -40 percent endured by the fund through stock market loses.

Cowell said: “Obviously we are facing rough economic times, and public pension funds like North Carolina’s are not exempt or invulnerable to that financial crisis that we’re experiencing as a country.”

She said that General Assembley would be approached for an additional $29 million above the approximately $400 million it receives annually. She added that more money may be needed in 2010.

North Carolina Retirement System provides benefits for 820,000 state employees and retirees. It’s real estate portfolio is split: 82 percent in the US and 18 percent across the rest of the world. It has invested in assets in France, Germany and the UK, as well as Japan, China and Hong Kong.