Citigroup announced plans to build a $200 million 14-story office building on the parking lot located across the street from their property in Long Island City last month. The building will be developed by an investment partnership of Tishman Speyer/Travelers New York City Real Estate Venture V., LLC, a partnership between Tishman Speyer Properties and the Travelers Group, a subsidiary of Citigroup. One of the largest investors in this fund is the New York City Employees’ Retirement System.

On October 17, 2003, New York City Comptroller William Thompson announced that the New York City Employees’ Retirement System, or Nycers, had committed to invest up to $100 million through the Tishman Speyer/Travelers NYC Real Estate Venture V., LP, in a co-venture with New York State Common Retirement Fund. The objective of the Tishman Speyer/Travelers U.S. Real Estate Venture V., LLC is to develop, redevelop, and acquire premium commercial property throughout the five boroughs.

Tishman Speyer/Travelers U.S. Real Estate Venture V., LP is a New York based real estate investment partnership sponsored by Tishman Speyer’s Properties LP and Travelers Group. The Tishman Speyer/Travelers Joint Venture committed $50 million to New York City projects based on Nycers’s $100 million commitment to invest in the fund.

The retirement fund has made other big investments in New York City real estate. In April, the Nycers and Tishman Speyer Properties purchased the 587,000-square foot office building at 885 Third Avenue, at the corner of East 53rd Street. The investment partnership paid $235 million for the building.

The New York State Retirement System and the New York State Common Fund have been very active investors in real estate over the past five years.

The New York State Common Fund has a real estate unit responsible for all investments. The Real Estate Bureau invests in real estate projects primarily through joint venture partners. There are a total of 12 joint-venture advisers, all prominent and active owners of real estate, including AMLI, Apollo Real Estate, Boston Properties, Equity Office Properties, Fairfield Residential, General Growth Properties, Hines Corporate Properties, KIMCO, Lexington Corporate Partners, Post Properties, Prologis Trust, and Taconic Investment Partners.

Some of these joint venture partners’ objectives include investment in the New York metropolitan area. These joint ventures include Apollo Real Estate, the co-developers with the Related Companies of the Time Warner Center and the new residential tower at 505 Greenwich Street; Boston Properties, the developers of two new office towers in Times Square; Equity Office Properties which last month entered into a contract to purchase the majority of the office tower at 717 Fifth Avenue; General Growth Properties, a developer of large malls; KIMCO, and Taconic Investment Partners.

Last September, the New York State Teachers’ Retirement System purchased a 49% interest in the 1.6 million-square-foot former headquarters of Bear Stearns, located at 245 Park Avenue. The Retirement System purchased its 49% interest from Brookfield Properties Corporation, which continues to own 51% of the property. The purchase price of the 49% interest was $438 million, valuing the entire building at $894 million.

On December 21, 2001, the New York State Teachers’ Retirement System formed a joint venture with Reckson Associates Realty Corp, whereby the Retirement System acquired a 49% interest in the office tower located at 919 Third Avenue. The joint venture paid $220.5 million for the property.

In July of 1999, the New York State Common Retirement Fund acquired a 90% interest in the 2.6 million-square foot former Port Authority building located at 111 Eighth Avenue. The Common Retirement Fund paid around $400 million to the seller Blackacre Capital Management. The remaining 10% interest was owned by Taconic Investment Partners LLC, who purchased the building with Blackacre in January 1998 from Sylvan Lawrence Co. for $387 million. This past February, the Common Retirement Fund sold a 70% interest in the building to Jamestown Companies for $755 million, resulting in a significant profit for the retirement fund.

In August of 2002, the New York State Common Fund jointly invested with its partner, the Taconic Investment Fund, in 111 Eighth Avenue, paying $158.1 million for the 300,000 square-foot office building at 450 Park Avenue on the corner of East 56th Street and Park Avenue.

This past December, the New York State Common Retirement Fund invested $25 million in the first phase of Avalon at Chrystie Place, a new 361-unit apartment complex being developed on the Lower East Side. The property is located on the entire south side of East Houston Street between Chrystie Street and the Bowery. The $25 million investment provided the retirement fund with an 80% ownership stake with the balance owned by the $3 billion real estate investment trust Avalon Bay Communities.

In October of 2002, Mr. Thompson announced that four of New York City’s five pension funds invested $135 million in the AFL-CIO Housing Investment Trust to expand the supply of affordable housing in the city. Of the $135 million investment, Nycers and the Teachers’ Retirement System approved investments of $50 million apiece, while the NYC Police Pension Fund approved $20 million and the NYC Fire Department Pension Fund approved a $15 million investment.

Earlier in the year, the AFL-CIO Investment Program, which includes the AFL-CIO Investment Trust, the AFL-CIO Building Investment Trust, and the AFL-CIO Development Fund, allocated $750 million to finance housing and commercial real estate investment in the five boroughs of New York City.

In March of 2002, the AFL-CIO Building Investment Fund provided a $25.4 million investment in partnership with the Dermot Organization to begin construction of a 259-unit residential rental building, Hudson Crossing, at 400 West 37th Street. The total development cost of the partnership for the project was $74.3 million. Last month, the partnership sold the building to Equity Residential, a REIT, for $93.1 million, recognizing a profit of more than 20% for their two-year investment.

The City Retirement Fund is an investor in the latest residential development of Dermot Organization and the AFL-CIO Housing Investment Trust. The partnership is in the process of constructing the $170 million residential rental development Clinton Green on 10th Avenue between West 51st and West 52nd Street.

The Housing Investment Fund has invested more than $320 million in New York City, financing the construction of more than 5,000 apartments. The fund invested in a new commercial office building, One Jamaica Center, in Jamaica, Queens, and invested $39.2 million in Brooklyn’s Bedford Gardens residential development.

One can definitely see that these pension fund investments have provided excellent returns as well as aided the regional economy. The investments by the pension funds provide them with ownership in Class A office buildings and rental apartment buildings in New York City, as well as an excellent mechanism to create jobs to stimulate the economy. The investments have provided much needed affordable and market-rate rental housing for the residents of New York City, and the construction of new office buildings in Times Square and Long Island City has helped retain jobs in New York City.