California State Teachers’ Retirement System (CalSTRS) has formed a $500m (€432.8m) lending partnership with a newly formed commercial real estate portfolio lender.
3650 REIT, which was launched in April, said the joint venture with CalSTRS will initially invest $200m and expects to increase the investment to $500m in future.
CalSTRS director of real estate Mike DiRé, told IPE Real Assets that the ”joint venture investment with 3650 REIT is in keeping with the implementation of the CalSTRS Collaborative Model across all asset classes.
”The CalSTRS Collaborative Model creates long-term relationships between CalSTRS and other long-term investors, including managers, to create efficient investment vehicles that produce attractive sources of return by effectively using the strengths of each investor.”
IPE Real Assets reported last month that CalSTRS plans to evaluate its existing 50 “collaborative relationships”, which include fund investments, separate accounts, joint ventures and investments in operating companies.
The joint venture with 3650 REIT will target originating loans to well-capitalised sponsors seeking debt capital for properties located in prime US markets.
The loans will be for groundup construction, recapitalisations, acquisitions and repositions where traditional capital is unavailable or not capable of fully satisfying the sponsor’s needs, 3650 REIT said.
DiRé, said: “CalSTRS has a longstanding working relationship with 3650 REIT co-founder Jonathan Roth. Because of our relationship with him and the team he and his partners have assembled we’re confident that our new joint venture will bring the returns we expect.
“As a long-term investor, CalSTRS seeks opportunities with our trusted partners to generate an enhanced yield to the actuarial earnings rate assumption thus maintaining our mission to secure the retirement benefits of California’s educators.”
Roth, said: “Our unlevered bridge lending strategy targets real estate assets that are in transition. Forming this partnership now with CalSTRS provides opportunities to target transitional assets with misjudged value, structural complexity or time sensitivity.”