Jon Peterson is a contributor to Real Estate Southern California, from which this article was excerpted.

Many of the major pension funds around the country are not investing in real estate the same way they did several years ago.

"You would never see a pension fund in the old days of the late 1980s and early 1990s invest directly with a real estate developer. This is something that is clearly happening today and will continue to occur in the future," says Robert Brunswick, president and CEO of Newport Beach-based Buchanan Street Partners, a real estate investment firm.

Buchanan Street Partners is part of this strategy. It will invest in $1.5 billion worth of real estate in 2007. It has a value-added investment strategy teaming up with developers like Houston-based Hines and Orange County-based Birtcher Development.