California Pension Fund Acquires Statler Arms
- Jun 03, 2012
The California State Teachers’ Retirement System acquired a majority stake in LCOR, a Berwyn, Pa.-based unit of the defunct financial giant Lehman Brothers Holdings Inc. Included in the more-than-$800 million transaction are 14 apartment buildings totaling 5,000 units and including Statler Arms Apartments in Downtown Cleveland.
The Statler is located at 1127 Euclid Ave., in the heart of the theater district. Cuyahoga County sets its market value at $9.5 million.
Developed in 1912 as part of the Statler Hotel chain, the building was converted for office use in 1980. In 2002, it became the Statler Arms Apartments. Lehman acquired the 295-unit Statler in 2006, after its previous owner defaulted on a $33 million loan used in the conversion to apartments; Lehman paid $16 million to the U.S. Department of Housing and Urban Development for the defaulted loan. The investment bank filed for bankruptcy protection two years later, and is now liquidating its assets.
The 100-year-old property features studio, one-, two- and three- bedroom apartments, ranging from 522 square feet for studios to 1,900 square feet for three-bedroom units, with rents between $650 and $1,900 a month. The building includes such amenities as fully equipped kitchens, spacious closets, two rooftop sundecks, a fitness center, a stunning marble lobby with coffee bar and patisserie, plush wall-to-wall carpeting, a business center and an attached parking garage.
It has become increasingly difficult to find vacant apartments in downtown Cleveland and nearby neighborhoods as the population grows and office workers move in from the suburbs. Occupancies approached 96 percent late last year, and the Statler is now more than 99 percent leased.
The largest teacher pension fund and second-largest public pension fund in the United States, CalSTRS has a real estate portfolio valued at $153.7 billion as of April 30, 2012. It is not likely to keep the Statler for very long, instead seeking to sell it at a profit.
Image courtesy of http://www.statlerarmsapartments.com.