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CalSTRS commits $1bn to RE

The Blackstone Group garnered the bulk of the commitments in the pension giant’s third quarter real estate allocations.

The California State Teachers’ Retirement System (CalSTRS) allocated $1 billion to real estate during the third quarter, according to the pension system’s most recent quarterly activity report for the asset class.

The California pension giant, which currently oversees more than $181.3 billion, has committed $1 billion or more three times in the last year: the fund committed $1.55 billion in the second quarter, and $1.25 billion during the fourth quarter of 2014.

The Blackstone Group garnered the bulk of the most recent CalSTRS commitments. The pension system allocated $500 million to Blackstone Property Partners International, the asset manager’s first core-plus fund deploying capital outside the US. Blackstone plans to invest in high quality, income-producing assets that need repositioning through the $1.8 billion fund, according to the pension plan’s documents.

CalSTRS also committed an additional $200 million on top of its existing $300 million allocation to Blackstone Property Partners, an open-ended fund. Launched in 2014, this vehicle was Blackstone’s first core-plus fund. The firm has since made a number of acquisitions, including last month’s 80-acre purchase of Manhattan’s Stuyvesant Town.

The pension giant also wrote a €100 million check to Niam Nordic Fund VI, a value-add fund targeting real estate in Sweden, Finland, Norway and Denmark. In August, the New York State Common Retirement Fund allocated the same amount to the Stockholm-based private equity real estate firm.

In addition, CalSTRS allocated £75 million to Brockton Capital Fund III with a possible £50 million co-investment. The London-based private equity real estate firm is targeting £500 million ($761.23 million) for the value add/opportunity fund. Other investors include the Teacher Retirement System of Texas, which allocated $65 million, and one of Israel's largest real estate companies, Alony Hetz Properties and Investments, according to PERE Research & Analytics.

Its final fund commitment of the quarter was $35 million to PREP Coinvest, a value-add fund managed by Asia-focused investment management firm PAG Real Estate Partners. CalSTRS has the option to invest up to $100 million in the vehicle.

Outside of fund commitments, the pension system has also closed on two direct US real estate investments. CalSTRS put $200 million into a 49 percent stake in DWNP Holdings, a mixed-use community in Massachusetts managed by DivcoWest. It also bought a $194 million industrial complex in Dallas managed by Principal Real Estate Investors.

CalSTRS held a total of $25.2 billion in real estate, or 14 percent of its overall portfolio, as of September 30. Of that amount, $12.8 billion of its property holdings are in core while $8.3 billion of the assets are in opportunistic and $4.1 billion in value-add.