By Jon Peterson
California State Teachers Retirement System (CalSTRS) has issued $1.3 billion of new capital into three joint ventures with managers that will in part be looking to invest across West Coast markets like the San Francisco Bay Area, Seattle and Southern California.
One of these investments will be focused on a variety of office assets. This is a new $650 million allocation for the BCal II joint venture with Boston-based Beacon Capital Partners, according to information provided by the pension fund. “The allocation to Beacon is to allow our joint venture to react to upcoming market opportunities. This relationship has the flexibility to invest in office, medical office and lab office space,” stated CalSTRS in an email.
Beacon has an investment history of investing capital in many markets along the West Coast, as stated on its website. These include the San Francisco and the broader Bay Area, the Pacific Northwest cities of Seattle and Portland as well as Los Angeles.
Beacon Capital Partners declined to comment when contacted for this story.
Along with the office strategy, CalSTRS has also created a new single-family debt joint venture with a commitment of $300 million, which will be placed into the Cal Hearthstone Debt joint venture, according to the pension fund. The manager of this relationship is Calabasas-based Hearthstone. This firm also did not respond to several emails seeking comment for this story.
The venture will provide loans with financing strategies within single-family housing. This will include single-family detached homes, townhomes and condominiums, according to CalSTRS. Hearthstone as a manager has regional offices in Los Angeles and Orange County and has market experience across California and Washington states, according to its website.
CalSTRS has also shifted capital from a core debt strategy to invest in value-add assets. The pension fund has allocated $396 million allocation into this area, which will be moved from the PacificCal PC Core debt venture into the PacificCal VII joint venture to invest in value-add real estate. Both ventures were managed by PCCP, which declined to comment when contacted for this story.
The pension fund’s strategy in this area is to reduce risk on its investments and allocate moneys into areas it deems safer, it stated in an email.
The targeted returns for the capital will be at least 12 percent net IRRs. The venture will be investing in a variety of property types like apartments, industrial, office and retail. The areas in which it wants to invest include under-served secondary and primary markets across the United States.