Investors - MAY 15, 2019

CalSTRS confirms purchase of Fairfield Residential

by Andrea Zander

The $233.9 billion California State Teachers’ Retirement System has plans to acquire apartment operator Fairfield Residential from Brookfield Asset Management.

“This transaction was possible because of the flexibility built into CalSTRS Collaborative Model. The result is our ability to align the real estate portfolio with a top-tier manager and long-time CalSTRS real estate partner,” said  Mike DiRé, director of real estate. “Transitioning to majority owner was appealing for a number of reasons, including the expansion of Fairfield’s geographic footprint and the growth of its capital base to include other like-minded investors.”

CalSTRS has been a partner of Fairfield’s since 1997 and a minority owner since 2005. Currently it has more than $2 billion committed with the company in develop-to-core, value add, and affordable housing strategies.

“As a majority owner, CalSTRS will be able to create better investment cost efficiencies and enhance its investment execution efforts in the coming years,” said Josh Kawaii-Bogue, associate portfolio manager . “Going forward, real estate staff will continue to support Fairfield in investment strategies and take advantage of the company’s breadth and experience in the multifamily sector.”

Scott Chan, Deputy Chief Investment Officer, added, “CalSTRS majority interest in Fairfield exemplifies the CalSTRS Collaborative Model, an effort to build internal asset management capabilities through acquiring top investment talent internally or externally. CalSTRS will continue to partner with best in class managers and operators as it seeks to create better alignment and reduce costs across its real estate portfolio.”

“Fairfield looks forward to building on our 20-year relationship with CalSTRS as we continue to originate and execute varied investment strategies in the multifamily space,” concluded Greg Pinkalla, Fairfield CEO.

Recently, Fairfield Residential become the new manager of Apex Laguna Niguel, a 284-unit asset located in Orange County. Overall, the firm has approximately 43,000 units nationwide across 36 markets.

Last year, Brookfield and Fairfield Residential held a final close on Brookfield Fairfield U.S. Multifamily Value Add Fund III with $1 billion in equity commitments. It is the third multifamily fund managed by Brookfield and Fairfield, which seeks to invest in multifamily assets throughout the United States by acquiring and renovating existing apartments and engaging in ground-up development in select coastal markets.

Brookfield became a Fairfield Residential majority owner in 2010. Fairfield Residential filed for Chapter 11 bankruptcy in 2009.

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