REAL ESTATE - The California State Teachers Retirement System has created a joint venture with Trammell Crow Residential to develop the 452-unit Alexian at Fitzhugh apartment complex in Dallas.
The total amount of capital in the venture is $63m. Around 75% of the project will be funded through a construction loan. CalSTRS made a $14m equity investment into the project. This will get it a 90% ownership take in the project. The other 10% is held by Trammell Crow Residential.
CalSTRS completed the transaction through its separate account real estate manager, BlackRock Realty. The portfolio manager for the CalSTRS account is Lorenz Menrath.
The development will not be started until the first quarter of 2007. The first order of business is to demolish three existing apartment buildings that are located on the site. These complexes total 195 units.
The construction of the new units will take around 22 months to complete. The complex should be ready to open by April of 2009. Trammell Crow Residential is the development partner in the JV. It will handle the day-to-day duties on the project.
CalSTRS made the investment in the Dallas project for its BlackRock Cal I, LLC. This is a joint venture with the pension fund and BlackRock Realty.
CalSTRS has invested a total of $400 million of equity in the venture. The plan is to put 70% leverage on the entire portfolio.
The pension fund now has around $100 million left to invest for BlackRock Cal I. There is a good chance that a new allocation will be made to the venture in 2007. The actual amount hasn’t been determined at this point.
Most of the transactions for BlackRock Cal I involve investing equity in new apartment development projects. Some deals could be the purchase of existing apartments that need a renovation, repositioning or new management.
BlackRock is mainly looking at three sections of the United States for deals. One area is the Northeast that includes the Washington, D.C. market. Florida is another targeted location with Orlando being a hot spot. The other area is the West Coast that includes California, Seattle and Portland.
