CalSTRS, Primestor JV to Pursue Urban Retail Opportunities

WEST SACRAMENTO, CA-The California State Teachers’ Retirement System has launched a joint venture focused on urban retail properties in underserved communities—a partnership that has the potential of reaching $250 million in commitments.

CalSTRS, partnered with Dallas-based Sarofim Realty Advisors in 2004 to form the Community Retail Development Fund, which seeks to invest with local and regional partners on retail properties in underserved communities, and the fund has now identified Los Angeles-based Primestor Development Inc. to develop, redevelop and acquire retail properties with an eye toward establishing “a stable portfolio of core assets over time,” according to a prepared statement.

CalSTRS chief investment officer, Christopher Ailman, says the commitment will help “rebalance its portfolio.” According to Ailman, “By building toward core, we also avoid the often overheated core buying market.”

The first project will include the development of a community shopping center in South Gate, about seven miles southeast of downtown L.A. The strategy for that project is to “build a high quality retail asset to attract national and major regional retailers,” according to the prepared release.

Ailman adds that “this relationship advances our effective efforts to search for investment opportunities in the underserved urban markets throughout California and specifically in retail.”

According to CalSTRS, it has been seeking quality investments in California to help realign its real estate portfolio toward that “core and more conservative emphasis.”

Back in 2010, CalSTRS’ real estate program was comprised of roughly 30% core. The goal, once its real estate policy was updates, was to “increase core assets to encompass 40% to 60% of the portfolio, generating expected returns of between 7% and 9% before fees.”

Check back with GlobeSt.com for more on this story and for thoughts from Primestor on the venture.