CalSTRS Invests in Planned Expansion of its West Sacramento Headquarters Campus
November 08 2018 - 7:33PM
Business Wire
Board decision will make more than 200,000 sq.
ft. of rentable Class A office space in CalSTRS’ current riverfront
building available for future lease.
The Teachers’ Retirement Board, trustees of the California State
Teachers’ Retirement System, approved the construction of a nearly
275,000 square foot expansion of its West Sacramento headquarters.
The additional space will allow the organization to grow in order
to meet increasing complexities inherent to implementing the
CalSTRS Collaborative Investment Model and ongoing administration
of the pension plan, while maximizing investment assets and capital
returns for the fund over the long term.
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Rendering of CalSTRS Building Expansion
(Graphic: Business Wire)
The board’s decision sets the timeline in motion to construct
the expanded facility adjacent to CalSTRS’ existing West Sacramento
location, with estimated completion expected in mid-2021.
Additionally, the decision to expand will make more than 200,000
square feet of rentable office space available for lease in
CalSTRS’ current riverfront Platinum LEED, zero waste certified
building. The potential for third-party lease revenue also further
increases the investment capital assets of the Fund. Demand is
expected to be high given the lack of Class A, LEED office space
available in or near the downtown area.
“There is no comparable office space available for lease in the
Sacramento region that sits right in the urban core,” stated Chief
Investment Officer Christopher J. Ailman. “This expansion will
allow the Investment Office to continue to grow our internal
management. The more investments we can manage in West Sacramento,
the less we have to pay external Wall Street firms. In fact, each
internal investment manager added saves the Fund about $1.2 million
in external management fees per year. A critical component of the
new CalSTRS Collaborative Model is hiring quality staff that can
oversee and directly manage investment opportunities. And a new,
expanded headquarters facility allows us to grow, attract and
retain that talent.”
West Sacramento Mayor Christopher Cabaldon added, “CalSTRS has
been a great neighbor the last 10 years and we’re enthusiastic
about their expansion. I’m thrilled that West Sacramento will get
progressively-designed and innovative office space on the leasing
market that will bring in tenants who share CalSTRS’ environmental
and community spirit.”
In 2006, when CalSTRS approved its current 409,000 square foot
headquarters, future expansion was factored into planning
considerations given forecasted membership, fund assets and staff
growth. As the organization grew, optimization efforts at the
existing headquarters allowed space usage to be extended three
years beyond what was originally intended. This provided CalSTRS
with time to diligently research and examine various expansion
options, including construction at the current location, acquiring
an existing building or leasing additional space in the region.
The building’s expansion space of nearly 275,000 square feet,
which is tightly-budgeted not to exceed $300 million, is
anticipated to be financed through lease revenue bonds, including
the possibility of green bonds. Though the final budget figure is
not expected until late summer 2019, analyses of funding options
demonstrated that lease revenue bond financing is the most
efficient vehicle and the best long-term value in terms of cost and
operational efficiency.
The building, as designed by ZGF Architects LLP along with
consultation and oversight from Ridge Capital, Inc. and DPR
Construction, will be the most sustainable in the region, providing
not just environmental benefits, but promoting health and community
connectivity as well. The design effectively realizes the purposes
of CalSTRS member services and employee productivity, while
incorporating construction strategies that are commercially
acceptable for a long-term organizational asset. Additionally, the
building will feature 80% onsite renewable energy, which enables
CalSTRS to achieve a Zero Net Energy (ZNE) facility
designation.
Chief Investment Officer Chris Ailman continued, “Investing in
our expansion contributes to the CalSTRS mission to secure the
financial future of our members by building the assets of the fund
and our ability to efficiently and reliably provide their
retirement benefits. And as a long-term institutional investor, we
have a sustained history of considering the evolving factors
surrounding building construction, including the reduction of
resource consumption, while ensuring capital expenditures are
supported by an appropriate return on investment.”
“CalSTRS made a smart move for the economic growth of the region
by making Class A office space available for lease,” said Barry
Broome, President and CEO of the Greater Sacramento Economic
Council. “When CalSTRS built their headquarters 10 years ago, they
were thinking ahead by constructing with high-quality, durable and
environmentally sustainable products on the waterfront, in an area
poised for growth—all factors that attract the best tenants.”
About CalSTRS
The California State Teachers’ Retirement System, with a
portfolio valued at $229.2 billion as of September 30, 2018, is the
largest educator-only pension fund in the world. CalSTRS serves
California’s more than 933,000 public school educators and their
families from the state’s 1,700 school districts, county offices of
education and community college districts. A hybrid retirement
system, CalSTRS administers a combined traditional defined benefit,
cash balance and voluntary defined contribution plan. CalSTRS also
provides disability and survivor benefits. CalSTRS members retire
on average after more than 25 years of service, with a median
retirement age of 62.9, and a monthly pension of approximately
$4,475, which is not eligible for Social Security participation.
For more data, download the CalSTRS Fast Facts 2017 brochure.
See how CalSTRS demonstrates its strong commitment to long-term
corporate sustainability principles in its annual Global Reporting
Initiative sustainability report: Global Stewardship at Work
Follow us on Twitter @CalSTRS
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version on businesswire.com: https://www.businesswire.com/news/home/20181108006091/en/
California State Teachers’ Retirement SystemMichelle Mussuto or
Krista Noonan, 916-414-1440Newsroom@CalSTRS.com