$1B CalSTRS/Panattoni JV Targets Core, Value-Add

CalSTRS Headquarters

SACRAMENTO-Panattoni Development Co. and the California State Teachers' Retirement System, both based here, have formed a $1.15-billion equity joint venture that will focus on industrial and commercial build-to-suits, core and value-add opportunities in the US and Canada. Panattoni is contributing core assets to seed the venture, which is being named PanCal.

The agreement includes a built-in capacity to increase the size of the capital, according to a prepared statement regarding the venture. Carl Panattoni, chairman of Panattoni Development, said that the partners expect to see an increasing number of opportunities in the near future. The joint venture will recapitalize many of Panattoni's existing projects, provide a significant source of capital and permit the company to take advantage of market opportunities, Panattoni said.

The core assets that Panattoni is contributing to seed the JV include a portfolio of 70 properties throughout the US. Among them is the company's Interstate 85 Distribution Center project in Union City, GA.

Interstate 85 Project

Principal Real Estate Investors and Eastdil Secured served as advisers to CalSTRS and Panattoni respectively in the formation of the JV. Principal Real Estate Investors will continue to serve CalSTRS in an advisory role as part of the joint venture agreement.

Steve Silk of Eastdil Secured commeted on the agreement: “It is nearly impossible to amass a portfolio of this size and quality of industrial assets.”

In addition to adding a competitive capital platform to finance opportunities for Panattoni, for CalSTRS the JV "provides the opportunity to partner with a developer with deep experience in the US and in Canada," according to the announcement.

Panattoni will be devoting considerable time and effort to the growth of PanCal, but will also continue to own and manage assets as well as pursue opportunities independent of the joint venture, the company said.