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NYC pensions invest in development project

The city pension system will invest $30 million in a development plan for the Lower East Side as part of a prior commitment to Taconic Partners.

The New York City Pension Funds expect to invest approximately $30 million in a major economic development plan for New York’s Lower East Side as part of a $200 million commitment the pension made to Taconic Investment Partners’ New York City Investment Fund in 2011.

After three years of negotiations, the City Comptroller’s office announced that Taconic, in a partnership with L&M Development Partners and BFC Partners, will develop a six-acre, mixed-use complex called Essex Crossing on a lot between Delancey and Essex streets. The $300 million investment, funded by the NYC Pensions’ commitment along with commitments from the developers, will be deployed over the next six years and will be leveraged into an estimated $1.1 billion. The plan includes affordable housing for low- and middle-income families, a supermarket, an Andy Warhol Museum and the relocation of Essex Market.

“Our city’s workforce has long been committed to investing their retirement savings where they live and work,” said city comptroller John Liu in a statement.  “We are pleased that the hard-earned dollars of our police officers, firefighters and teachers will help improve life on the Lower East Side for everyone, regardless of income or age.”

Closing on $220 million in equity in October 2011, the New York City Investment Fund exclusively invests in New York real estate, targeting multifamily, office and retail assets. Of the original $200 million commitment made by the NYC Pension Funds, approximately half of the capital has been put to work on three projects, including Essex Crossing, according to Taconic. The money also has gone towards Sterling Mason, a condominium development in New York’s Tribeca neighborhood that will include 33 units ranging from 2,000 to 4,000 square feet, as well as the MovieLab office building on West 54th Street, which Taconic purchased for $112 million in October 2012. 

The $139 billion pension system, which includes the New York City Employees’ Retirement System, Teachers’ Retirement System of the City of New York, New York City Police Pension Fund Subchapter Two, New York City Fire Department Pension Fund Subchapter Two and the New York City Board of Education Retirement System, devotes $4.3 billion of its portfolio to private equity real estate.