California State Teachers’ Retirement System (CalSTRS) plans to invest up to $300m (€264.3m) to expand its West Sacramento headquarters campus for future lease.

The $229.2bn pension fund - which already occupies the 409,000sqft headquarters - said it has approved the construction of an additional 275,000sqft of office space. The expansion will add more than 200,000sqft of rentable office space available for third-party lease.  

Work is expected to be completed in mid-2021.

Chief Investment Officer Christopher J. Ailman, said: “This expansion will allow the Investment Office to continue to grow our internal management. The more investments we can manage in West Sacramento, the less we have to pay external Wall Street firms.

In fact, each internal investment manager added saves the fund about $1.2m in external management fees per year, Ailman said.

“A critical component of the new CalSTRS Collaborative Model is hiring quality staff that can oversee and directly manage investment opportunities. And a new, expanded headquarters facility allows us to grow, attract and retain that talent,” Ailman said.

The CalSTRS Collaborative Model creates long-term relationships between CalSTRS and other long-term investors to create efficient investment vehicles that produce attractive sources of return by effectively using the strengths of each investor.

In 2006, when CalSTRS approved its current headquarters, future expansion was factored into planning considerations.

The building’s $300m expansion is expected to be financed through lease revenue bonds, including the possibility of green bonds.