CalSTRS’ New Single-family Commitments to Target San Francisco and Seattle

CalSTRS, California State Teachers Retirement System, BrookCal, IHP Capital Partners, Brookfield Asset Management, San Francisco, Bay Area

painted-ladies-sfBy Jon Peterson

California State Teachers Retirement System has approved $150 million worth of new commitments in real estate targeting single-family investment opportunities. These two commitments will both consider transactions in the San Francisco Bay Area, Seattle and others, according to an e-mail received from the pension fund.

The two commitments were a new $100 million investment made into the BrookCal JV and $50 million into IHP Capital Partners VI.

[contextly_sidebar id=”xH5NEa5OClWsJ8HnOYMOtT3WMlbpY5sA”]CalSTRS feels good about investment capital into the single-family housing sector at this point in the market cycle. The pension wrote in an e-mail that it believes there are opportunities in the marketplace to execute our strategy with our partners.

The BrookCal entity is a joint venture between the pension fund and Toronto-based Brookfield Asset Management. The structure of the venture has CalSTRS holding a 47.96 percent ownership position and the balance held by the manager.

The investment strategy is to make equity investments in single-family residential properties and land that will be used for projects in the future. The deals will include many markets in the United States including the San Francisco Bay Area and Seattle.

The pension fund has placed this commitment into the opportunistic sector of its real estate portfolio. The targeted returns are at least 13 percent net IRR, after fees have been paid.

CalSTRS considers the new commitment as a follow on investment. Previous to the latest commitment, it had allocated $240 million to this same strategy.

Partners IV is a joint venture between CalSTRS and IHP Capital Partners. The pension fund holds a 97.1 percent ownership stake in the venture and the manager 2.9 percent, according to a document from CalSTRS.

IHP has its corporate office in Newport Beach. It does have a regional office in San Francisco located at 505 Montgomery, according to its Web site.

The venture has a primary focus on the West Coast. This would include the markets of the San Francisco Bay Area and Seattle. It has an investment strategy that calls for investing capital in single-family housing projects, residential land and making entity-level investments in companies that operate or build single-family projects.

CalSTRS has put Partners VI into its opportunistic bucket in its real estate portfolio. The targeted returns are a 13 percent net IRR, after fees have been paid. The pension fund has invested with IHP in the past with this same strategy to the tune of $200 million.

West Coast Commercial Real Estate News