NYSTRS Goes Shopping

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).