By David G. Barry
The New York State Teachers’ Retirement System (NYSTRS) is
now a sizable owner in a national operator of shopping centers. The move comes
on the heels of the $148 billion pension fund seeing another shopping center
owner that it backed sold for a reported $3 billion.
Tim Mack, a NYSTRS’ spokesman, said the pension fund made a $370 million
investment in EDENS and now owns approximately 40% of the Washington,
DC-based real estate company. EDENS owns and operates 14.2 million square feet
across 110 properties in major markets around the country. Most of its
properties are store-anchored shopping centers.
In March, EDENS announced that it had acquired eight open-air, grocery anchored
shopping centers on the West Coast, including three in the San Francisco Bay
Area, two in Seattle, and one each in the Los Angeles, San Diego and Sacramento
areas. The price of the purchases was not disclosed, but trade publication The
Registry said EDENS paid more than $243 million for the Bay Area properties and
nearly $104 million for the Seattle centers. The eight properties encompass
more than 1 million square feet and are anchored by a Target or grocery stores
such as Whole Foods, Vons and Albertson’s.
Mack said that nearly all of the pension system’s retail exposure “remains in
the grocery-anchored neighborhood space, which continues to have strong
fundamentals.”
As of Dec. 31, 18.7% of NYSTRS’ real estate portfolio was in the real estate
sector. Office accounts for 24.4% and residential 21%. The pension fund has a
11% target allocation to real estate and had an actual allocation of 10.2% as
of June 30, 2021. NYSTRS’ real estate portfolio was valued at $14.8 billion in
June 2021, up from $11.8 billion in June 2020.
NYSTRS’ investment in EDENS comes just weeks after a private real estate
investment trust that it was a major investor in – Donahue Schriber Realty
Group – was sold to First Washington Realty. Terms were not
disclosed, but Bloomberg reported the price at $3 billion. In a board meeting document, NYSTRS said
the sale represented a 9.6% net IRR and a 2.5X equity multiple.
Donahue
Schriber had a portfolio of shopping centers in the West including in such
markets as the Bay Area, Orange County, Portland, Sacramento, San Diego and
Seattle. First Washington now operates more than 150 neighborhood and community
centers in 22 U.S. states and the District of Columbia. The portfolio includes
more 20 million square feet of retail space and serves more than 3,600 tenants.
First Washington’s investors include the California Public Employees’
Retirement System (CalPERS).