New York State Common Retirement Fund, in partnership with Maryland-based Artemis Real Estate Partners, has closed on a new acquisition on behalf of the pension’s $300 million real estate emerging manager program. Through a new joint venture with CT Realty Investors, the two parties have purchased 1333 South Tippecanoe Avenue in San Bernardino, California.
The 225,000-square-foot industrial property was acquired in an all-cash, sale-leaseback transaction from Loma Linda University, according to data provider Real Capital Analytics. CT Realty Investors has retained the right to terminate the lease with Loma Linda in order to begin development of a 400,000-square-foot build-to-suit property on the 19-acre site.
The purchase price of the acquisition was not disclosed, but the asset was valued at $15.76 million as of January 15, according to tax assessor records. PERE understands that CT Realty Investors contributed about 1.5 percent of the purchase price, while New York Common and Artemis put up the remainder of the capital.
CT Realty Investors is one of six operating partners that have been approved for New York Common’s real estate emerging manager program, with an additional five in the approval process. Under the program, the pension will acquire assets in partnership with Artemis, and the joint venture typically will invest the majority of the equity in each transaction. This latest purchase follows the program’s debut acquisition – announced in the fall – of an office building in Emeryville, California with Ellis Partners.
Like Ellis Partners, CT Realty Investors is the new iteration of a former company. The Aliso Viejo, California-based firm’s predecessor entity, CT Realty, was established in 1994 by Robert Campbell and U.T. Thompson and acquired, developed and repositioned office, industrial, multifamily, self-storage, and retail properties in California. CT Realty primarily invested high-net-worth capital and formed joint ventures with real estate managers such as Heitman and Behringer Harvard.
After the death of Campbell and retirement of Thompson, two of the firm’s remaining executives, Larry Methena and Marc Belluomini, created CT Realty Investors in January 2012 with four new partners that included Susan Barlow, formerly the head of global client relations at RREEF. CT Realty Investors is focused on industrial investments in Southern California and seeks to build a portfolio of income-producing assets through joint ventures and separate accounts with institutional partners.
In fact, the acquisition with New York Common marks CT Realty Investors’ first relationship with an institutional investor. “This program is transformational to our firm in that it has enabled us access to enhanced core institutional capital in a joint venture format, allowing us to execute on attractive opportunities in our target market,” said Barlow, the firm’s chief strategy officer, in a statement. The firm, however, previously partnered with Artemis on two transactions.
In October 2011, NY Common allocated $300 million to Artemis as its initial investment in a new real estate segment of the pension plan’s emerging manager portfolio. The separate account – through which Artemis seeks to generate core-plus returns by making equity and debt investments – invests directly in real estate through joint ventures with emerging managers, rather than investing in the emerging manager itself. Such ventures focus on buying stabilized assets that require $10 million to $30 million in equity and modest leverage.
Under the program, an eligible emerging manager would have no more than $1 billion of equity under management and possess extensive knowledge of a local market and property type. The firm also is required to have been in business in its current form for 12 years or less and have less than three institutional funds.