First Industrial Breaks With CalSTRS on JVs

CHICAGO-First Industrial Realty Trust has broken off four joint venture partnerships with the California State Teachers’ Retirement System (CalSTRS). The REIT sold its 10% interest in the JVs to CalSTRS for a lump sum payment of $5 million.

Because of the sale, the locally-based industrial REIT also was forced to reorganize and cut overhead, according to the trust. First Industrial has transferred its portfolio work in four major market offices – Phoenix, Nashville, Seattle and Miami – to third parties.

In September 2008, First Industrial had extended its $5 billion venture with CalSTRS. The ventures include the $1.6-billion Development and Repositioning JV (FirstCal 1), the $1.6-billion Strategic Land and Development JV (FirstCal 3), the $475-million FirstCal Europe JV, the $285 million FirstCal Canada JV, and the 2005 Core JV (FirstCal 2), which was formed for the acquisition of a $1-billion portfolio. The ventures were supposed to be extended until December 2018.

In a statement, the REIT did not comment on why the ventures were concluded early, and a spokesman did not return calls or emails. A spokesman for CalSTRS reportedly has said there was no longer agreement of interest between the two companies.

Properties in the ventures include the First Park Oak Creek industrial park in Oak Creek, WI; 759,000-sf spec distribution center in the DalPort Business Park in Wilmer, TX; 55 acres near the Edmonton International Airport that can hold 1.1 million sf; 1,300 acres in Inland Empire, CA; and even a 177,000-sf distribution center at 220 W. Manville St. in Compton, CA.

Bruce Duncan, president and CEO of the REIT, said in a recent conference call that the company had to make some organizational and overhead reductions because of the break with CalSTRS. “We regretfully are making some additional changes to our infrastructure affecting some of our team. We will be engaging third-party providers to manage our portfolios in Phoenix, Nashville, Seattle and Miami, with oversight from regional directors in nearby markets. These changes are expected to offset our loss of revenues from debentures,” Duncan said during the call.