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Atlanta Gains Favor With Florida Pension Fund

City Jumps to No. 5 on State Board of Administration's Top Investment Markets Lists
February 6, 2018
Atlanta finally beat New England at something.

The capital of the South just leapfrogged Boston on the Top 10 list of largest investment markets of one of the largest public retirement funds in the country. It's not exactly like the Atlanta Falcons beating the New England Patriots in last year's Super Bowl, but it is a key show of investor confidence in Atlanta's commercial real estate market.

Atlanta now ranks No. 5 on the State Board of Administration of Florida's Top 10 Markets list, based on net asset value. Boston, which had held the No. 5 spot, dropped to No. 6. San Francisco, Los Angeles, Washington, D.C. and New York round out the top four.

The Florida fund's investments in metro Atlanta have an aggregate market value of $662 million and net asset value of $480 million, according to information from the State Board. They include major capital stakes in two of Houston-based Hanover Cos.' largest apartment developments.

Atlanta leapt to the fifth spot thanks to the State Board of Administration's (SBA) recent acquisition of the Three Alliance Center office tower in Buckhead. Advised by Stockbridge Capital, SBA paid nearly $270 million, or a record-breaking $532 per square foot, for the 30-story building developed by Tishman Speyer.

The State Board of Administration (SBA) manages more than 30 funds, including the Florida Retirement System Pension Plan, one of the largest public retirement plans in the United States. The retirement system pension plan represents 75% of the total assets under SBA management.

The State Board is happy to have trophy tower Three Alliance in its collection. "It was a great addition to the portfolio," said John Kuczwanski, manager of external affairs at the State Board.

Kuczwanski said the fund is open to growing its Atlanta portfolio. "If an attractive property that adds the appropriate diversification to the portfolio [is identified], we would consider adding additional investments in Atlanta," Kuczwanski tells CoStar News.

The fund has previously unreported stakes in two of Hanover's high-profile apartment communities that are nearly complete. The State Board made a $44 million investment in Hanover Buckhead Village, a 20-story tower with 353 apartments on Roswell Rd., and a $34.3 million investment in Hanover Midtown, a 29-story tower with 342 units at West Peachtree and 10th streets.

Hanover has partnered with Loudermilk Cos. on both of the developments in which the State Board of Administration has an interest.

Its acquisition of Three Alliance marks a return to the Buckhead office market for the State Board. SBA acquired One Atlanta Plaza on East Paces Ferry for $114.8 million in November 1999 and sold it to CBRE Global Investors for $166.8 million in February 2006, according to CoStar Property. Oaktree Capital Management now owns One Atlanta Plaza.

Tony Wilbert, Atlanta Market Reporter  CoStar Group   
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