REAL ESTATE - New York State Teachers Retirement System(NYSTRS) has formulated a joint venture with the Bozzuto Group to develop apartment complexes.
There is a total of $100m (€74.9m) of equity in the venture. The pension fund contributed $95m and Bozzuto $5m. The ownership interests in the venture will follow along the same lines as the equity contributions. There will be a total capitalisation in the relationship of $400m to be achieved through 75% leverage.
NYSTRS made its investment through its separate account real estate manager, JPMorgan Asset Management. The portfolio manager on this account is Wayne Comer.
The pension fund believes that this relationship is a good fit for its portfolio as it is a way to further diversify its real estate assets.
The investment strategy is to develop A and B quality apartment assets in the Mid-Atlantic region in the US.
Thomas Bozzuto, CEO of Bozzuto Group said: "Our strategy is to create value in the short term through project cash flow and in the long term through the disposal of assets."
Some of the projects may include a mixed-use component. Bozzuto said: "The projects may have a retail, office or garage space. Among the applicable project types are transit-oriented developments, higher density infill projects, mixed-use with ground floor or adjacent retail and suburban and mid-rise complexes."
The JV will have a specific focus on projects that are located in the greater Washington-Baltimore metro region, Pennsylvania, Delaware and New Jersey. Bozzuto said, "The timing of the venture coincides with the extremely favorable market conditions in the greater Washington-Baltimore metropolitan region. The economy is booming.
"There is continued strong job growth and a significant percentage of the work force is transient, providing a large number of Class A renters by choice," he said.
Construction has already started on the initial project for the venture. This is the development of the 204-unit Woodland Park Crossing in Herndon, Va. The apartments are expected to begin delivery in the fall of 2008.
The apartment units will range in size from 715 to 1,215ft2 (66.42 to 112.9m2). Planned shared amenities in the complex include a swimming pool, fitness centre, business centre and structured parking. The complex is located within the Woodland Park Crossing Town Center community. It offers a 135,000ft2 of retail space, which includes a Harris Teeter grocery store and a Starbucks.