John Frandson, managing director for Des Moines-based PrincipalReal Estate Investors, tells GlobeSt.com that the fund is openingwith "four or five" projects or acquisitions in its sights,including a three-city portfolio buy. Due diligence is under wayfor deals in Dallas, Houston, San Antonio, Austin and Phoenix."We're really hitting the ground running," he says.

Frandson says CalSTRS' equity, which will be 35% leveraged, isup to $210 million and can be increased. "The plan is this is notjust a one-time shot," he stresses. "We want to create asignificant portfolio beyond the $600 million." He estimates itwill take "two or three years" to exhaust the initial round offunding.

Principal has overseen other CalSTRS-funded joint ventures forother property types, but this is the first time it's taken thepurse strings for one of its industrial programs. Frandson says thethree-way alliance has been four to six months in the making.