Dallas Police & Fire Pension Fund loses $200 million on luxury real estate

Looks to sell Hawaii houses, Napa Valley vineyard

The Dallas Police & Fire Pension System is looking to sell several luxury real estate properties after sustaining losses of about $200 million on the deals, according to a report from Bloomberg.

Among the properties that the pension fund is selling are a group of homes in Hawaii purchased “at the top of the real estate bubble”, a vineyard in Napa Valley, and a $34 million patch of land in Arizona that was to be developed into a golf course.

The golf course never materialized because the fund was unable to secure water rights, and the land was sold for $7.5 million, a loss of $26.5 million.

From the Bloomberg report:

The sales mark a shift from an approach that by 2011 left more than 60% of the system’s money in real estate, private equity and other alternative investments, only to see returns suffer. The fund’s 4.4% gain in 2013 compared with the 16.1% average advance for U.S. public pensions as stocks rallied, according to research firm Wilshire.

“It’s a terrible indictment of our strategy,” Dallas City Councilman Philip Kingston told Bloomberg. Kingston sits on the pension’s board.

“Losses have been caused by our exposure to luxury real estate, he said.

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