One of the nation's largest institutional investors is beginning to exit what has been the strongest asset class among its commercial property holdings--multifamily communities.

The nation’s second-largest public employee pension fund, California State Teachers’ Retirement System (CalSTRS) says its portfolio is particularly "multifamily heavy" and it is looking to liquidiate while adding its investments in office, industrial, and retail properties.

Could this mean multifamily is no longer the darling of the commercial real estate class?

“We continue to believe the current aggressive pricing in the U.S. and selected global markets may be signaling a pricing adjustment. We are reviewing our portfolio holdings to minimize risk of write-downs,” the fund stated in its plan.

CalSTRS had more than $26.5 billion invested in real estate at the end of March 2016. Those holdings posted an 11.1% return in its 2015-’16 fiscal year.

While strong, the results were 1.5% lower than CalSTRS’ custom real estate benchmark return of 12.6%. They were also below the NCREIF Fund Index - Open End Diversified Core Equity, which returned 14.2% in 2015.

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