Sunday, May 29, 2011

Former CALPERS investment sells for 8 cents on the dollar

A 10,200-acre site in the Arizona desert has sold for $32.5 million this week, five years after a group with investors including the California Public Employees’ Retirement System paid $400 million for the land.
Arcus Property Solutions LLC, a private-equity fund with about $100 million under management, paid cash for the property in Goodyear (about 60 miles southwest of Phoenix), which is now called Amaranth Land LLC. It had been planned for a 42,000-home community by the Calpers-financed group when it was purchased in 2006.
Yes, that's right. Public employees had their pensions wasted on a million dollar real estate scam during the peak of the housing bubble, and now someone has just swooped in on the carcass of that fraudvestment for about 8 cents on the dollar.
Not surprisingly, the group of investors who benefitted off of that scam was led by....wait for guesssed it....the Goldman Sachs.
“Of all the speculative deals I’ve seen here, this was right at the top,” (Terry McDonnell, publisher of Business Real Estate Weekly in Scottsdale, AZ) said in a telephone interview. “It’s hard for me to think of a more speculative deal of this magnitude in Maricopa County.”

Calpers, the nation’s largest pension fund, had investments valued at $209.7 million in MW Housing Partners III in the fiscal year ended June 30, 2007, according to its annual report. The next year, the investment had a negative market value of $102.9 million, the fund said. MW Housing wasn’t listed as a Calpers investment in fiscal 2010, its most recent report.

So to make it simple, public employees in California invested some of their salaries in a pension fund. That pension fund invested that money in a planned living development in Arizona (somewhere that perhaps some of those employees might have wanted to retire to). That development tanked when the housing bubble (created by companies like Goldman Sachs) burst, and the investment was foreclosed upon. Three years later, Goldman Sachs purchased the property for 8% of the price that the public employees (through their pension fund) had paid for it. Now, the public employees can't afford to retire, have one less place to retire to even if they could afford to retire anyway, and Goldman Sachs has a shitload of cattle-grazing land.
Oh, and Goldman Sachs continues to get away with fraud, and public employees are getting blamed for all of the problems in America.
Got it?