By Jon Peterson
El Segundo-based CenterCal Properties is in the process of paying approximately $42 million, or $73 per square foot, to acquire a redevelopment site in Concord located at 2001 Diamond Boulevard, according to multiple sources aware of the transaction.
CenterCal Properties did not respond to a phone call and an e-mail in time for the deadline for this story.
The site that is in the process of being acquired is a Class A office building that was first developed in 1983. It totals 572,827 square feet. This property is a four-story complex currently owned by the Chevron Corporation. The land area for the property is 1.3 million square feet or about 30 acres.
The expectation is that CenterCal would be re-developing the office building into a retail asset. The company is known as a developer, re-developer and buyer of retail properties, according to its Web site. The company owns another property in the Bay Area, the Blackhawk Plaza located at 3380 Blackhawk Plaza Circle in Danville.
The real estate company is funded with a joint venture with the California State Teachers Retirement System, and the entity goes by the name of CenterCal. The independent real estate fiduciary on this relationship is Des Moines, Iowa-based Principal Real Estate Investors.
The pension fund has invested a total of $579 million of equity into the joint venture through several commitments. The total capitalization of the venture is $900 million, according to a CalSTRS document. The most recent commitment by the pension fund was a $150 million allocation that it made in the third quarter of 2013.
The venture has a two-pronged investment strategy that focuses exclusively on retail properties. One part of this is to construct new properties in a build-to-core strategy. This is a way for the pension fund to own core assets and not have to go through a competing bid process to buy the properties. These build-to-core assets will start out in the value-add sector of the pension fund’s portfolio and then be transferred to core once they become stabilized. The venture will also buy some existing assets that can be improved over time.
CalSTRS sees that the return requirements for the joint venture will vary from 8 percent to 12 percent. The kinds of retail properties in which it plans to invest will include everything from a grocery-anchored shopping center to a regional mall. The focus of the deals for the venture will be the West Coast in markets like San Francisco, Seattle, Portland and Los Angeles.