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CalSTRS Acquires Majority Interest in LCOR in $800M Deal

The California State Teachers’ Retirement System (CalSTRS) acquired a majority interest in LCOR and real estate holdings owned by Lehman Brothers, LCOR’s former partner, in a transaction valued at more than $800 million.

CalSTRS completed the deal in partnership with LCOR management. It will now gain access to more than 7,400 multifamily units, 7.7 million sq. ft. of commercial space and a development pipeline of mixed-use assets managed by LCOR. In addition, the partners will gain an ownership stake in 14 multifamily assets containing 5,000 apartment units.

Among the properties will be hundreds of apartment units in Lower Manhattan and Greenwich, Conn., assets in Aventura, Fla. and Tysons Corner, Va., and development opportunities in Tysons Corner, Montgomery County, Md., Hoboken, N.J. and Lower Manhattan.

CalSTRS plans to expand the relationship with LCOR with additional investments in the future, including development and redevelopment of multifamily and commercial assets in the Washington D.C./New York corridor.

“We are extremely pleased to partner with such a quality company of experienced real estate professionals, and look forward to capitalizing on the substantial growth potential of this enterprise,” said Timothy Works, CasSTRS’ portfolio manager overseeing the new venture, in a statement.

According to Peter DiLullo, LCOR’s president and CEO, “LCOR has enjoyed a longstanding relationship with CalSTRS in an existing multifamily partnership, and we are looking forward to furthering our business together in this new venture. Our partnership with CalSTRS provides a solid foundation for growing our portfolio and executing on well-positioned, complex development opportunities, a business in which we have excelled over the last 30 years.”

Morgan Stanley acted as the exclusive financial advisor to LCOR and Lehman. Principal Real Estate Investors and GI Partners advised CalSTRS.

“This is an excellent outcome for these properties and for all of the constituents who will benefit, including our creditors,” said Jeff Fitts, Lehman’s head of real estate, in a statement.

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