Thought lefty Cali in trouble from debt? Take a look at their PUBLIC pension debt.

bravo said:
Its all relative.....

The deficit for all of 2009 hit a record $1.4 trillion and the Obama administration is forecasting that the deficit for this year will hit $1.56 trillion and will remain above $1 trillion for a third straight year in 2011.

4 trillion in 3 years for the spenders in DC...thats Congress in case you didn't know.
If we paid this bill at $1 per second it would only take about 125,000 years.
SO,,,
California is in great shape

On second thought, I lied...it would take California about 168,000 years to pay back 535 billion
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I was wondering about the expected 2010 deficit, because most of the HealthCare expenses won't have taken effect yet, and there won't be the stimulous bill that was a huge part of last year's record deficit. If 2010 is still going to edge out 2009, though, that is just sad...
 
cawacko said:
CalSTRS (and other pension funds) determine their investment allocation internally (broken down between bonds, stocks, real estate etc.)

In the real estate space they usually hire consultants who help them determine which advisors (like my company) they want to use. CalSTRS also determines its own investment strategy such as do they want to pursue more core assets (buildings close to being fully leased; less risk less return) or more value add strategy (buildings that need to be leased up; more risk higher returns).

Once we get those marching orders from them we then go looking for assets in the market that match CalSTRS return parameters. It's our job then to know the markets and the players in each market and be able to dig up deals for CalSTRS. Before we make any purchases CalSTRS has to sign off on the deal as well.

I'm not trying to absolve my company and myself from what is going on but I am showing how the process works.
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chasing performace can get you hit head on by a train.
 
cawacko said:
CalSTRS (and other pension funds) determine their investment allocation internally (broken down between bonds, stocks, real estate etc.)

In the real estate space they usually hire consultants who help them determine which advisors (like my company) they want to use. CalSTRS also determines its own investment strategy such as do they want to pursue more core assets (buildings close to being fully leased; less risk less return) or more value add strategy (buildings that need to be leased up; more risk higher returns).

Once we get those marching orders from them we then go looking for assets in the market that match CalSTRS return parameters. It's our job then to know the markets and the players in each market and be able to dig up deals for CalSTRS. Before we make any purchases CalSTRS has to sign off on the deal as well.

I'm not trying to absolve my company and myself from what is going on but I am showing how the process works.
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I know how the process works but still you're the expert so will be given the blame. Real Estate isn't like some new high-tech device that no-one has but everyone wants and only one company can build it. When you see returns in the 40-50% range a red flag should go up. I'm not an expert by any means but even I can understand that. There nothing wrong with investing a small portion of the fund in a boom like that but its irresponsible to do that with a larger percentage.
 
Superfreak said:
How much geographical diversification did you have? I assume you were buying throughout the country?

Colorado's teachers pension plan did the same thing. That is one of the stupid things about the pensions, they set such stringent restrictions on how much real estate they could hold. Here it was 40%. So of course when the stock market tanked, their equity percentage tanked pushing the real estate portion way above the limits.... forcing them to sell... at one of the worst times in the past 40 years.

They are currently revising their guidelines to try and prevent such an occurrence from happening again.
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My team in L.A. focused strictly on West Coast accusitions but you are correct CalSTRS (and all the other pension funds) set up allocations for asset classes (office, industrial, retail & multi-family) and then geography and that geography covers the entire U.S. Actually in CalSTRS case because of their size they had an international strategy as well.

And you are dead on about the asset allocation in the portfolio as a whole. What you described that happened with the Colorado teachers happened with each and every one of our pension clients. It's the reason my group went from purchasing $1.4 billion worth of real estate in 2007 to $200 million in 2008 and $100 million in 2009 and why 10 of the 12 people on my team got laid off.
 
Topspin said:
chasing performace can get you hit head on by a train.
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That's true. Our value add fund started chasing deals in markets like Dallas and Atlanta which have a lot more volitility (sp) and obviously a lot more risk and your sitting there with a half empty building basically praying you find a tenant to lease the remainder of your space.
 
cawacko said:
That's true. Our value add fund started chasing deals in markets like Dallas and Atlanta which have a lot more volitility (sp) and obviously a lot more risk and your sitting there with a half empty building basically praying you find a tenant to lease the remainder of your space.
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hey our penision fund had 13% in real estate in 09 up from 12% in 08 so looks like our geniuses did the same thing.:clink:
 
Southern Man said:
I know how the process works but still you're the expert so will be given the blame. Real Estate isn't like some new high-tech device that no-one has but everyone wants and only one company can build it. When you see returns in the 40-50% range a red flag should go up. I'm not an expert by any means but even I can understand that. There nothing wrong with investing a small portion of the fund in a boom like that but its irresponsible to do that with a larger percentage.
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Most of the pension funds we worked with had real estate allocations in the 10% range which I don't believe to be outrageous.

And the 40% - 50% returns were definitely an anomaly. For the most part CalSTRS focused on buildings in strong mature markets (West L.A., S.F., N.Y.) with credit tenants. Less return but less risk. The land play and strategy in the Inland Empire was more risky and they knew it at the start. They got in early in a growth market and made big returns. They obviously also took it in the shorts when the market turned but that risk was known going in (not to the extent that it happened but they knew risk was involved).
 
cawacko said:
That's true. Our value add fund started chasing deals in markets like Dallas and Atlanta which have a lot more volitility (sp) and obviously a lot more risk and your sitting there with a half empty building basically praying you find a tenant to lease the remainder of your space.
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we have been sticking with medical office space, multi family and the stand alone box stores... general office space is just too risky right now. (we use public non traded REITs for our real estate allocations.... and they are finding one steal after another as they have cash and others are still being forced to sell)
 
It's not just how they invested, we can all 2nd guess what was wiser and likely there is some who will be right, but it's primarily the SCALE of the pensions in unionized government positions coupled with the LARGE amount of government employees.

We all know this is a state thoroughly dominated by the far left, which gives favorable terms to unions:

As an example, they pay over 5000 employees over $100,000 per year in pension.
http://www.ihatethemedia.com/california-is-paying-5115-retired-public-employees-over-100000-per-year

And they have grown government massively with hiring far too many people with far too many programs.
I mean these pensions are for an absurd 2.6 million public retirees:
http://www.californiahealthline.org...public-pensions-underfunded-by-over-500b.aspx
 
cawacko said:
Depending on who you call righties. Tom McClintock was the choice of conservatives in the race. I don't really remember Republicans here being euphoric about Arnold but I know people were happy Davis was gone. Arnold's turned out to be pretty disappointing. He attempted to do some good things but did not succeed.
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I don't remember that either. I never believed Arnie was a true conservative. Not with all that god forsaken Hollywood influence and the Kennedys on top of that!

I supported McClintock!
 
cawacko said:
Not unless they repeal Prop 13 or voters choose to tax themselves higher in a ballot initiative.
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Ohh yeah, I forgot about 2/3 needed for tax increase. LOL
here come the layoffs, how else can you do it besides cutting spending?
 
cawacko said:
Most of the pension funds we worked with had real estate allocations in the 10% range which I don't believe to be outrageous.

And the 40% - 50% returns were definitely an anomaly. For the most part CalSTRS focused on buildings in strong mature markets (West L.A., S.F., N.Y.) with credit tenants. Less return but less risk. The land play and strategy in the Inland Empire was more risky and they knew it at the start. They got in early in a growth market and made big returns. They obviously also took it in the shorts when the market turned but that risk was known going in (not to the extent that it happened but they knew risk was involved).
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10% is still too high. I had that going in Boston when I was first buying into a house 25 years ago and so moved somewhere else. Those rates were the product of too much growth in a dense, highly regulated market with plenty of HUD cash thrown around. Now the shit has hit the fan and I saw it all coming, so have no shit on me. Those who bought in now have shit all over them.
 
KingCondanomation said:
It's not just how they invested, we can all 2nd guess what was wiser and likely there is some who will be right, but it's primarily the SCALE of the pensions in unionized government positions coupled with the LARGE amount of government employees.

We all know this is a state thoroughly dominated by the far left, which gives favorable terms to unions:

As an example, they pay over 5000 employees over $100,000 per year in pension.
http://www.ihatethemedia.com/california-is-paying-5115-retired-public-employees-over-100000-per-year

And they have grown government massively with hiring far too many people with far too many programs.
I mean these pensions are for an absurd 2.6 million public retirees:
http://www.californiahealthline.org...public-pensions-underfunded-by-over-500b.aspx
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No one has claimed that it is just how it is invested, but how they have invested is part of the problem. The other major component is the fact that they have not been paying into the system sufficiently to cover the liabilities.

On benefit levels, perhaps they are too high, I don't really know, but average monthly benefits of about $2,000 in a state with a high standard of living doesn't sound absurd to me. Neither does the fact that a pension system which began in 1932 has 2.6 million retirees. California is a big state and has a lot of employees that eventually retire.
 
Southern Man said:
10% is still too high. I had that going in Boston when I was first buying into a house 25 years ago and so moved somewhere else. Those rates were the product of too much growth in a dense, highly regulated market with plenty of HUD cash thrown around. Now the shit has hit the fan and I saw it all coming, so have no shit on me. Those who bought in now have shit all over them.
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We really didn't do anything residential wise. Everything was commercial though with land we would sell to or buy from a residential developer.
 
I have a sister that started working for the State of MA at age 55 as some high-falutin' administrator and plans to retire at 65. After ten years she gets 85% of her salary and full health insurance. That's a bit more than $2000/ month. Since she's been in private companies since she graduated college and contributing to 401K she's going to be in high cotton. CA is probably in the same boat.

I think its a riot when these liberal states screw paint themselves into a corner like this. :)
 
Southern Man said:
10% is still too high. I had that going in Boston when I was first buying into a house 25 years ago and so moved somewhere else. Those rates were the product of too much growth in a dense, highly regulated market with plenty of HUD cash thrown around. Now the shit has hit the fan and I saw it all coming, so have no shit on me. Those who bought in now have shit all over them.
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Would you invest in strictly stocks and bonds then?
 
cawacko said:
We really didn't do anything residential wise. Everything was commercial though with land we would sell to or buy from a residential developer.
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Commercial is the same thing, general, only without HUD. Or dies HUD include condos?
 
TuTu Monroe said:
I've never been happy with Arnold and the Democratic legislature has really screwed us.
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Arnold is a prime example of what leadership looks like when you put a centrist in charge. He should have lowered taxes, protected the farmers and given the middle finger to the knee-jerk enviro nuts and made Indian Casino's liable for taxes...Cali would be doing well if he had.

He might have had his hands a bit tied by the Dem legislature...but everything I suggested would have gained him popular support amongst the average joes if he had sold it the right way. The trouble was he tried to be Mr appeaser to his peers...I absolutely abhore fence sitting appeaser's in government!
 
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