A real estate partnership involving the huge pension fund is now scrambling to restructure a loan after failing to make a payment on more than $1 billion borrowed to purchase thousands of acres of residential land north of Los Angeles. LandSource Communities Development is now negotiating with a syndicate of more than 100 banks headed by Barclays Capital — trying to restructure the $1.24 billion in debt. LandSource received notice of default from the banking syndicate in late April, after missing a payment when a decline in the assessed value of 15,000 acres of undeveloped land in the Santa Clarita Valley triggered an additional charge, says Tamara Taylor, a spokeswoman for LandSource.

"It was a remargining payment that was required because the land was reappraised by the bank group and the land had lost value," Taylor told an Associated Press reporter. The land was appraised at $2.6 billion at the time of purchase last year.

All of this has to have a familiar ring to home builders, but now it's the bargain-hunting investors who used to circle the builders who are dangling from a hook. MW Housing Partners acquired 68

CalPERS, with $254.8 billion in assets, holds a stake in MW Housing Partners.

One thing is certain: anyone counting on California land returning to 2005 values over the next few years is heading for a fall.

The illustrations in the Process columns for the March 24 and May 23 editions of Housing Giants should have been credited to BuildIQ. We apologize for the omission.