By Jon Peterson
California State Teachers Retirement System has made a new $300 million equity investment with Los Angeles-based Resmark to invest in housing investment opportunities across several markets, according to information received from the pension fund.
The new investment will be placed into the ResCal Investments LLC joint venture that the pension fund has created. Two of its targeted markets for transactions will be the San Francisco Bay Area and Seattle. The venture will also seek investments in Southern California, Arizona, Nevada and the Mid-Atlantic states.
CalSTRS is the 98 percent owner of the joint venture, and Resmark will hold the remaining two percent. The pension fund has placed this investment into the opportunistic sector of its real estate portfolio. The venture is looking for transactions that can produce an internal rate of return in excess of 13 percent, after fees have been paid.
ResCal will be looking at two types of investment opportunities. One is to place capital into for-sale single family housing projects. It also will be looking to find some residential land acquisition and development transactions.
CalSTRS has made a move to increase its overall real estate targeted allocation by 1 percentage point, which means the allocation will be moved from 12 to 13 percent. It becomes affective at the beginning of April, as stated by the pension fund in a board meeting document. This investor does have the option to either be plus or minus its targeted allocation by 3 percent, per its investment policy.
The San Francisco and Seattle residential markets have been successful for investors over the last decade, and the high occupancy led by strong employment factors in both markets have made them attractive for investors.