SACRAMENTO, Calif. - The real estate manager selected to securitize a property portfolio owned by the $58 billion California State Teachers' Retirement System will have to find co-investment partners willing to invest in buildings that have depreciated in value by an aggregate of 17%.
The fund's carrying cost of its 46-building portfolio is $1.137 billion. The buildings were worth $938 million as of June 30, 1995, according to records obtained by Pensions & Investments.
Industry sources say Boston-based Aldrich Eastman & Waltch and LaSalle Advisors, Chicago, are the finalists in the search. Elleen Okada, deputy chief executive officer-investments, declined to identify the finalists, saying they will be disclosed this month.
The manager hired by the fund will be charged with evaluating the public real estate investment trust market to identify and recommend companies to trade properties for shares.
Depreciating properties outnumber appreciating properties almost 4 to 1. The biggest loser was Centre Pointe, Walnut Creek, Calif., which has dropped 66% in value to $14.4 million.
Other big losers include 1325 G St., Washington, down 36% to $40.7 million; 1990 M St., Washington. down 46% to $13.8 million; and Anaheim Plaza, Anaheim, Calif., down 34% to $38.3 million.
The best performing property was the The Alondra/Midway Industrial Park, Cerritos, Calif., which rose 15% in value to $9.5 million.
Property values might have dropped further since the last valuation because of the predominance of office buildings and retail properties in the portfolio. Those two property types have been the poorest performers. Also, several properties had market values equal to book value, which has the overall effect of propping up returns.
