Business

Mon Jun 09 22:10:39 PDT 2008

(Recasts with Calpers and MacFarlane)

NEW YORK, June 9 (Reuters) – LandSource Communities Development LLC, a large Californian property developer that has filed for bankruptcy protection, represents less than half of one percent of Calpers investments, the biggest public U.S. pension fund said on Monday.

"LandSource, with heavy investments in Southern California land, fell victim to the housing industry downturn," Calpers said in a statement.

The pension fund had invested more than $900 million in LandSource through its investment partner MacFarlane Partners. Calpers has a market value of $245.5 billion.

"LandSource is one of thousands of investments of Calpers, and it does not represent a large portion of the overall fund," Calpers said.

The bankruptcy filing on Sunday reflects the depressed state of California’s housing market.

Using Calpers investment, MacFarlane Partners joined with Weyerhaeuser Co, a timber products company, to take a 68 percent interest in LandSource. Home builder Lennar Corp and property investment company LNR each have a 16 percent stake in LandSource, Calpers said in its statement.

LNR Property Corp, which was spun off Lennar, was taken private by Cerberus Capital Management and others in 2005.

LandSource said on Sunday it had received commitments for debtor in possession financing from a group of lenders led by Barclay’s Bank, including a $135 million revolving line of credit.

"For several months LandSource has attempted to reach agreement with its lenders on an interim plan that would provide the needed time for a complete review of its financial situation," LandSource said.

LandSource’s primary investment is The Newhall Land and Farming Company, which owns 15,000 acres of land north of Los Angeles.

At the end of April, Standard & Poor’s said the company would soon seek protection from creditors, and that LandSource’s cash had declined to about $25 million from about $115 million in early February.

"We regret that LandSource was forced to file for bankruptcy protection and hope that the parties will be able to reach an equitable solution," MacFarlane said in a statement. "We agree with LandSource that, in the long term, this investment will be seen as a good one."

(Reporting by Christopher Kaufman and Ilaina Jonas; Editing by Rory Channing, Toni Reinhold)

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