(Bloomberg) -- Sun Life Financial Inc. saw the value of its US office-building investments plunge more than 26% last year, with particular pain around one property in San Francisco.   

The Toronto-based insurer and asset manager reported on Wednesday that the total value of its investment properties, which includes industrial, retail and multifamily residential buildings, slipped 3.8% to C$9.7 billion ($7.2 billion) at the end of last year.

The declines came as mark-to-market valuations sunk amid stress in the commercial real estate space, with US office investments taking the biggest hit, dropping in value to C$476 million from C$647 million a year earlier. Sun Life’s Canadian office properties, in contrast, shed almost 11% of their value, declining to C$1.6 billion. 

Some of those shifts in value came from selling some buildings and buying other ones, but most of the losses were on paper as Sun Life reduced the value of unrealized gains on properties it’s held for many years, Randy Brown, chief investment officer and and head of insurance asset management, said in an interview Thursday.

Sun Life previously sold all but one of its office buildings in San Francisco, and that property took a major hit in the fourth quarter as increased sales activity reset market comparables lower, Brown said. But he added that Sun Life has no mortgages on the majority of its properties and can afford to hang onto them for the long term in the hopes of a turnaround as interest rates decline and the economy improves.

“We are in no way a forced seller,” Brown said. “San Francisco, as an example, will not be like this forever. It’s the home of tech. They will find a way to reinvest in the community and have it prosper. So we, as a long-term holder who’s unlevered, we love markets like this, and it gives us opportunity.”

Sun Life took a C$148 million charge on lower real estate market values in the quarter, which was the main driver behind a 36% decline in fourth-quarter reported earnings. Still, the company beat analysts’ estimates on underlying results amid strong insurance sales, particularly in Hong Kong.

Read More: Sun Life Beats Estimates on Strong Asia Growth, Insurance Sales

The firm is likely to take further real estate charges, totaling C$225 million, in the first half of this year, followed by “stability from there,” according to a note to clients Thursday from TD Securities analysts Mario Mendonca and Masa Song.

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