Dive Summary

• Years after the recession pushed private equity and pension funds away from risky real estate ventures, many funds have returned to such investments, hoping for annual returns near 20%.
• "Opportunity funds" focus on high risk, high return ventures, such as a new condo building where units are expected to sell for up to $60 million, or existing commercial buildings without tenants.
• After the largest public pension fund in the nation lost about $10 billion in real estate at the start of the recession, some are worried that investing in these funds is unwise.

From the article:

Calpers acknowledged last month that the shift it started in 2011 from risk and toward more-stable property investments is proving tougher than it expected. It is becoming "hard for Calpers managers to make [real-estate] investments in which they can reasonably expect to generate returns in excess of" liabilities, the pension's real- estate consultant wrote the Calpers board.