WEST SACRAMENTO, CA-Local investment giant CalSTRS has moved into the development business, buying a majority stake in New York City-based firm LCOR from Lehman Bros. for more than $820 million. The deal also includes the ownership of 14 apartment complexes across the country, totaling almost 5,000 units.
LCOR has developed more than 20,000 residential units and more than 16 million square feet of commercial space, and currently manages more than 7,400 multifamily units and 7.7 million square feet of commercial property. The company also has a pipeline of mixed-use real estate with a total build-out potential of more than 16 million square feet.
CalSTRS portfolio manager Tim Works tells GlobeSt.com that the fund will focus on developing real estate assets at attractive yields in excess of current market cap rates, with an emphasis on multi-family and mixed use properties in the Washington, DC to New York City corridor. “The large-scale infill transit oriented development sites, coupled with LCOR’s development expertise, provide CalSTRS the opportunity to build significant core assets on an ongoing basis,” he says.
However, Works says that more than 90% of the purchase price is attributable to the roughly 5,000 unit portfolio, which allows CalSTRS to immediately increase its core holding in apartments. The multifamily properties include 25 Broad in New York City; the Commons of McLean in McLean, VA; Greenwich Place, Greenwich Oaks and Putnam Green in Greenwich, CT; Sienna at Riverview in Mesa, AZ; Vegas Grand in Las Vegas; Renaissance in Santa Rosa, CA; Summer Wood in Merrillville, IN; Hanover Place in Tinley Park, IL; Statler Arms in Cleveland; Lincoln Pointe in Aventura, FL; Champions Walk in Bradenton, FL and the 1,180-unit Jasmine in Atlanta.
Of the 14 multi-family assets, CalSTRS has identified roughly half of these assets as core, long-term hold properties which represent the majority, 92%, of the transaction value. The other properties are considered value-add and will be sold over the near-to-medium term, Works says.
Morgan Stanley acted as the exclusive financial advisor to LCOR and Lehman in the transaction. CalSTRS was advised by Principal Real Estate Investors and GI Partners. GI Partners, a Menlo Park, NJ-based private equity firm, will act as ongoing asset manager for CalSTRS' interests in the platform, and affiliates of GI Partners have co-invested in the acquisition.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
