Thomas Properties Group & California State Teachers’ Retirement System Sign Agreement Regarding Joint Venture Comprising Lo...
July 17 2013 - 1:50PM
Business Wire
Thomas Properties Group, Inc. (NYSE: TPGI) announced today that
it and its longtime investment partner, California State Teachers’
Retirement System (“CalSTRS”), have signed an agreement regarding
the TPG/CalSTRS, LLC joint venture that owns City National Plaza in
downtown Los Angeles, CityWestPlace and San Felipe Plaza in Houston
and three properties in Northern Virginia. The agreement gives
Thomas Properties an option to cause the joint venture to liquidate
and distribute City National Plaza to CalSTRS and distribute the
other properties to Thomas Properties or, alternately, an option to
acquire all of CalSTRS’ interests in the joint venture and its
properties. If Thomas Properties elects to exercise either option,
it must give notice by July 31, 2013, in which case it will have
until September 30, 2013 to complete the transaction. If Thomas
Properties does not exercise either option, CalSTRS has a separate
option to cause the joint venture to distribute City National Plaza
to CalSTRS.
“We view this opportunity as transformative, allowing us to make
further progress toward achieving our strategic plan of acquiring
wholly owned or controlled properties in attractive growth
markets,” said Thomas Properties Chairman and CEO James A.
Thomas.
If Thomas Properties elects to liquidate the joint venture and
take a distribution of the Houston and Northern Virginia assets,
Thomas Properties will make an equity contribution of approximately
$163 million into the joint venture. If Thomas Properties elects to
redeem CalSTRS completely out of the joint venture, Thomas
Properties will make an equity contribution of approximately $678
million to the joint venture to be distributed to CalSTRS. Thomas
Properties has significant cash on hand as a result of its non-core
disposition activity and is also in advanced discussions with
potential capital providers to assist in funding these
contributions.
“Thomas Properties has achieved great results with these joint
venture properties, creating significant value since the venture
acquired them,” said Mike DiRe, Managing Director of Real Estate
for CalSTRS. “We determined that now is the time to monetize our
investment in this venture, and we look forward to continuing our
successful relationship with Thomas Properties.”
The twin tower City National Plaza with 2.5 million square feet
was acquired by the joint venture in 2003 with only approximately
20 percent occupancy. Under Thomas Properties’ management, the
project’s infrastructure has been upgraded to state of the art; the
project has attained LEED Gold certification, has attracted two
top-tier plaza level restaurants and is now close to 90 percent
leased with premier tenants. City National Plaza has been
re-established as the signature property in downtown Los
Angeles.
Buoyed by the strong and growing economy in Houston, both San
Felipe Plaza and CityWestPlace are highly desirable properties that
are approximately 94 percent leased. San Felipe Plaza, in the
dynamic Galleria submarket of Houston, is a 46-story office
building with 980,000 rentable square feet. CityWestPlace, a
four-building office campus with 1.5 million rentable square feet
in Houston’s Westchase District, is home to many top international
companies and has outstanding amenities including exceptional
common areas and restaurants.
Thomas Properties Group and CalSTRS formed the joint venture in
2003 and are also partners in a separate joint venture that owns
approximately 2.5 million square feet of premier office space in
downtown Austin, Texas. Thomas Properties also serves as an
investment advisor to CalSTRS on about 930,000 rentable square feet
of office space, and was recently selected to continue to be a
separate account manager for CalSTRS.
About Thomas Properties Group
Thomas Properties Group, Inc., is a full-service real estate
company that owns, acquires, develops and manages primarily office,
as well as mixed-use and residential properties on a nationwide
basis. The company's primary areas of focus are the acquisition and
ownership of premier properties, both on a consolidated basis and
through its strategic joint ventures, property development and
redevelopment, and property management and leasing activities. For
more information about Thomas Properties Group, Inc., please visit
www.tpgre.com.
About the California State Teachers’ Retirement
System
The California State Teachers’ Retirement System, with a
portfolio valued at $166 billion as of May 31, 2013, is the largest
teacher pension fund and second largest public pension fund in the
United States. CalSTRS administers a hybrid retirement system,
consisting of traditional defined benefit, cash balance and
voluntary defined contribution plans, as well as disability and
survivor benefits. CalSTRS serves California's 862,000 public
school educators and their families from the state’s 1,600 school
districts, county offices of education and community college
districts.
Forward Looking Statements
Statements made in this press release that are not historical
may contain forward-looking statements which are based on TPGI’s
current expectations and assumptions. Such forward-looking
statements include, but are not limited to, statements about the
benefits of the agreements recently entered into by TPGI with
CalSTRS. Although TPGI believes the expectations reflected in any
forward-looking statements are based on reasonable assumptions,
these statements are subject to numerous risks and uncertainties.
Factors that could cause actual results to differ materially from
TPGI’s expectations include TPGI’s ability to obtain funding to
complete the proposed transactions with CalSTRS, the ability to
obtain lender consent to such transactions, CalSTRS’ ability to
monetize City National Plaza, actual and perceived trends in
various national and economic conditions that affect global and
regional markets for commercial real estate services (including
interest rates), the availability of credit and equity investors to
finance commercial real estate transactions, our ability to enter
into or renew leases at favorable rates, which can be impacted by
the financial condition of our tenants, risks associated with the
success of our development and property redevelopment projects,
general volatility in the securities and credit markets, and the
impact of tax laws affecting real estate. For a discussion of some
of the factors that may cause our results to differ from
management’s expectations, see the information under the captions
“Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in our Form 10-K for
the year ended December 31, 2012 and our subsequent Form 10-Q
quarterly reports, each of which is filed with the Securities and
Exchange Commission. TPGI disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
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