CalSTRS-POBA venture extends $64 mn loan on Atlanta office project

  • 2019-03-15

A joint venture between the California State Teachers’ Retirement System (CalSTRS) and the Public Officials Benefit Association (POBA) has provided a $64 million senior loan on a prime office development in Atlanta, in a new investment for the $400 million venture.

The two-building development is believed as 46,000-square-meter Atlantic Yards, one of two office projects spanning 65,000 square meters within Atlantic Station in midtown Atlanta. But it could not be confirmed immediately.

Hines, a real estate firm and Invesco Real Estate borrowed the loan to fund the construction which is scheduled for completion by the end of 2020.

They formed a JV in 2017 to develop the projects: T3 West Midtown, a heavy timber office building and Atlantic Yards.

CalSTRS and POBA drew $32 million each on the venture fund for the loan investment which is expected to generate annual returns of around 7%.

A POBA source confirmed the report.

CalSTRS and POBA launched the $400 million JV last year to invest in the US real estate market by committing $200 million each. They focused on senior loans and multi-family and retail assets.

The venture had invested $40 million in a retail asset near New York Penn Station, a railroad station; $70 million in a residential building in Texas; and $82 million in Beverly Hills property in Los Angeles.

With the venture using most of its capital, they will set up a new JV fund for new investment.

POBA, a $11 billion South Korean retirement fund for local government employees, also launched a similar JV with Teacher Retirement System of Texas (TRS) in 2018.

POBA is seeking to boost investment in US real estate loans through JVs with other global pension funds, its chief investment officer Dong-hun Jang said in a recent interview.

By Daehun Kim

daepun@hankyung.com

<Edited by Yeonhee Kim>

(The name of the joint venture partner was corrected to California State Teachers’ Retirement System (CalSTRS) on March 19 from the California Public Employees’ Retirement System (CalPERS).)