Calstrs takes 90 percent stake in LCOR

The California State Teachers’ Retirement System is set to purchase a more than 90 percent stake in the large New York developer LCOR from Lehman Brothers, the Wall Street Journal reported. Lehman Brothers first invested in LCOR in 1999 and saw it through the recession and numerous projects, including the conversion of 25 Broad Street and Terminal 4 at JFK International Airport.

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Calstrs negotiated a price of $820 million for the majority stake, which includes 14 multi-family buildings with some 5,000 apartments. As a developer, LCOR will provide Calstrs with more than existing real estate investments: it will also give the pension fund the opportunity to be on the front end of new and up-coming projects. “[LCOR will] provide Calstrs [with] the opportunity to build significant core assets on an ongoing basis,” said Timothy Works, Calstrs portfolio manager on the LCOR deal.

The pension fund is seeking to build up its real estate portfolio to $19 billion or 50 percent of its core investments, just as Lehman Brothers begins its plan to liquidate portions of its $13 billion worth of real estate assets. Calstrs has a history of investing in New York real estate developments and renovations such as 1177 Sixth Avenue and 575 Lexington Avenue (note: correction appended).  [WSJ]