(Bloomberg News) The California Public Employees' Retirement System is selling its interests in 28 housing developments, about one-fifth of its residential real-estate portfolio, as the $226.5 billion fund reduces its property holdings, a spokesman said.

Calpers, the largest U.S. public pension, is selling 16,300 unbuilt home sites and about 5,000 acres of undeveloped land in 11 states, spokesman Brad Pacheco said by telephone.

"It's one of our last, largest holdings in housing," he said. "It's part of our overall restructuring in our real- estate holdings."

Newland Real Estate Group LLC, a closely held developer whose projects Calpers invested in since 1994, and the North American affiliate of Japanese homebuilder Sekisui House Ltd., purchased Calpers's interests in the 28 projects, said Bob McLeod, chief executive officer of San Diego-based Newland. Sekisui is the lead financial partner and Newland will run the development operations, he said.

"Calpers was a great partner," McLeod said in a telephone interview. "All Sekisui and Newland did is form a partnership to buy out Calpers. We had to put some money into the new deal. Sekisui was the largest investor."

The Wall Street Journal, citing unidentified sources, said the two companies were paying between $500 million and $600 million. MacLeod and Pacheco said they couldn't confirm the price due to confidentiality agreements.

As of Sept. 30, real estate accounted for 8.7 percent of Calpers' total holdings, according to a fact sheet on the system's website.

Calpers Benchmarks

Last August, Calpers's investment committee lowered the fund's goal for real estate as a proportion of assets to 8 percent from 10 percent.

Calpers had fallen short of its real-estate benchmarks because its holdings suffered "significant writedowns" during the housing bubble, according to a staff report at the time.

The value of U.S. land sold for development has fallen more than 70 percent from its peak in 2006, said John Burns, president of John Burns Real Estate Consulting Inc. in Irvine, California. Newland is the developer of six of the 25 largest masterplanned communities in the U.S. The largest is Cinco Ranch outside Houston, where 862 new homes sold last year, according to Burns.

The deal is part of a trend of Asian investors seeking U.S. real estate for development because they see the potential for growth, a housing recovery and a safe haven from economic instability, Burns said in a telephone interview.

"This is a huge deal for the industry," Burns said. "It gives the largest developer in the country a new capital partner, which will make it easier to provide more lots to the 'thirsty' homebuilders."